Find out who qualifies for COBRA health insurance coverage, how to get it, and what premium subsidies may be available to make health insurance affordable.
Money Girl
189 MG How to Get COBRA Health Insurance Coverage
(upbeat music) - Hi, everyone, and welcome back to "Money Girl's Quick and Dirty Tips" for "Rich Your Life." I'm Laura Adams. When I say cobra, do you conjure up a vision of a scary snake being hypnotized by a guy playing a flute? Well, when it comes to healthcare, cobra is something very different. In fact, it's what you'll need if you get bitten by a snake after you leave your job. In this podcast, I'll tell you who's eligible for cobra, how to get it, and how to make it more affordable. Cobra is an acronym that stands for Consolidated Omnibus Budget Reconciliation Act, even though the name of the law doesn't mention anything about healthcare or insurance. It provides a temporary continuation of group health benefits that would ordinarily be canceled when you leave a job. Cobra insurance gives you the exact same benefits and choices you had before you left your company. In order to receive cobra benefits, you and your employer must meet certain criteria. Your employer must provide a group health plan and have at least 20 or more employees on the payroll. Employees and independent contractors who participate in a group health plan are eligible for cobra benefits when they voluntarily leave a job, have their work hours cut so they lose benefits, or are terminated for any reason other than gross misconduct. Spouses and dependent children of former employees can also receive cobra benefits when the covered worker dies, is eligible for Medicare, or gets legally separated or divorced. Additionally, children can receive cobra benefits when they're no longer a dependent of the covered worker according to the rules of the group health plan. In order to receive cobra coverage, employees must notify their human resources department or the employee who administers health insurance within 30 days after one of the events that I mentioned, such as a termination or a cut and work hours. Beneficiaries of a qualified worker have up to 60 days to elect cobra coverage after a qualifying event, such as a divorce. After you notify your former employer that you want cobra health coverage, they have to send you an election notice within 14 days. After you receive the notice, you or your beneficiaries have up to 60 days to decide whether or not to take the coverage. If you don't make a decision by that time, you may lose your right to claim cobra benefits. If you would like to take cobra, you have to pay the initial premium within 45 days and the coverage begins on the day that your group policy would have otherwise ended. Cobra lasts for a maximum of 18 months in most situations, but could end earlier if you don't pay premiums on time, you become eligible for Medicare benefits or your former employer cancels the group health plan. The cost of cobra insurance can be expensive because you pay the entire group plan premium plus a small administrative fee. That can be much higher than the amount you paid when you were an active worker because many employers pay a portion of health insurance premiums for you as an employment benefit. Your first cobra payment will probably be higher than normal because you must pay premiums retroactively from the date you left the company. Cobra premiums can go up if the cost of the group plan increases, but they're generally fixed for 12 months at a time. I recommend that you compare the cost of cobra insurance to a private policy. My husband just changed jobs and has 90 days until he's qualified for his new insurance benefits. Even though cobra coverage through his old employer is more expensive than a private policy, we've opted for cobra because it's so much easier to get. Doing all the paperwork for a new private policy can be a real headache, especially when we only need it for a few months until his new benefits begin. But if his waiting period was longer, like six months or a year, I'd apply for a less expensive private policy instead. You can get quotes for individual health insurance policies at sites like ehealthinsurance.com and netquote.com. You may be eligible for a big reduction in your Cobra insurance premiums if you or a family member were laid off at any time from September 2008 through the end of May 2010. As long as you're not eligible for Medicare or for health insurance under any other group plan, the government will subsidize 65% of premiums for up to 15 months. That means you only have to pay the remaining 35% of the cost of Cobra if you were terminated from your job. I love learning and anything that makes learning easier. If you're a parent and your child needs some homework help, then Ixcel is a right for your family. Ixcel is an online learning program for kids covering math, language arts, science and social studies. 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If you initially declined to take Cobra coverage, you may have another opportunity to get it and to pay the reduced premium. For more information about the details of the Cobra subsidy program, read the Cobra frequently asked questions on the Department of Labor's website at dol.gov/cobra. A quick and dirty tip is that you should never go without health insurance if you can help it. Expensive medical bills can bankrupt anyone who isn't prepared for them. So remember that health insurance is critical not only for your physical well-being but for your personal finances as well. Check out the Money Girl Facebook page by going to facebook.com and doing a search for Money Girl. You can also keep up with me on Twitter at twitter.com/lauraattoms. And for extra tips, I encourage you to sign up for the weekly Money Girl email newsletter. When you go to the Money Girl section at quickanddirtytips.com, you'll see the words subscribe on the top right-hand side of the page. And I love to get your email questions or comments at money@quickanddirtytips.com. And one more thing, are you feeling overworked and overwhelmed? You need to pick up a copy of Steve or Robin's new book, get it done guys nine steps to work less and do more. It covers all the big things that cause you to fall behind on your goals. You'll learn how to deal with distractions and get techniques to stop procrastinating. Get it done guys nine steps to work less and do more is available in paperback, as an e-book or as an audio book. Pick up or download your copy today. I'm glad you're listening to Ching. That's all for now. Heard to see if Money Girl, your guide to a richer life. (upbeat music) (upbeat music)