Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA is a federal law that protects participants in group medical plans who are guaranteed continuation coverage for a certain time period if terminated for any reason except gross misconduct. Employees who are laid off are protected, not those fired for cause. COBRA rules apply to employers with a plan with twenty or more employees at any time during the year. The eligible party must elect COBRA coverage and pay the premium within 45 days. While the employer could opt to pay the premium, often it is the employee who shoulders this expense which may be up to 102 percent of the premium in effect.
For example, assume a family's health insurance premium is $1,000 a month. While an employee with the company, the employee assumed $450, the employer $550. Upon termination due to corporate downsizing, the employee now has to pay $1,020 which is 102 percent of the full $1,000 premium. Enumerated below are the events for which a terminated employee would qualify for continued coverage under COBRA:
- Termination: 18 months of continued coverage from the date of severance or 29 months if the employee is disabled.
- Termination from the plan due to a reduction in the employee's hours: 18 months of continued coverage from the date of severance or 29 months if the employee is disabled.
- Death of employee: dependent coverage extends to 36 months
- Dependent child no longer qualifies as such under the plan: this individual is eligible for 36 months of additional coverage.
- Employee becomes eligible to receive Medicare: this individual is eligible for 36 months of additional coverage.
- Divorce or legal separation: former spouse qualifies for 36 months of additional coverage
Health Insurance Portability and Accountability Act (HIPAA)
Individuals with at least 18 months of creditable coverage (group health plan, individual health insurance, Medicare, Medicaid and any state-specific programs) and without access to other health insurance must be allowed to enroll in an insurance policy.
Health Savings Accounts
Personal FinanceWe go through everything you need to know about COBRA so that you can decide if it's right for you.
Personal FinanceLearn how you can avoid financial catastrophe - without Medicare.
Financial AdvisorWith companies trying to pass on more costs to employees, making the right choices during open enrollment is more important than ever.
Personal FinanceUnderstand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
Financial AdvisorHow to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
RetirementLearn what to expect to pay for health insurance in retirement, what is covered through Medicare and what the Affordable Care Act means for retirees.
Personal FinanceSorting through Medicare can be confusing. Here are some potential mistakes to avoid when choosing your plan.
Personal FinanceUnder ACA, is health care insurance something you can take with you state to state?
MarketsUnderstanding how split dollar life insurance plans are designed and what tax regulations they must follow.
Personal FinanceIf you bring a pre-existing condition to a new insurer, you may find yourself without coverage.