What You Need to Know about COBRA Health Benefits

Posted October 15, 2009 by Bernz

In today’s unstable job market, the possibility of sudden job loss is on the minds of many Americans. Being downsized in the current economy deals a double blow as it is more difficult to find a new job when most employers are tightening their belts and reducing their workforce.

cobrahealth

Unemployment not only means the loss of a steady income but also the end of group health insurance. That can put a family at risk until a new job picks up the slack. COBRA health benefits can help in this situation.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. The Act was originally drafted in 1986 and has been recently updated as part of the presidential stimulus bill. COBRA provides for a continuation of health benefits for employees and independent contractors in certain situations.

All employers who have 20 or more employees are required to maintain group health insurance benefits for terminated employees for a standard period of 18 months. The catch for the employee is that he or she now has to pay the premium that was once paid by the employer. That can still be a substantial amount of money monthly but it is often less expensive than paying private individual health insurance premiums.

If the employee is or becomes disabled, COBRA health benefits can be extended for up to an additional 18 months. COBRA may also be available for families of a deceased employee.

Under the new stimulus bill, if you were let go from your position between September 2008 and December 2009, you may be eligible to pay only 35% of the premium for COBRA benefits for up to nine months after which time, you pay the full premium. Employers can choose to continue to pay a portion of the health insurance premiums for terminated employees but they are not obligated to.

While COBRA health benefits can be expensive while you are seeking a new job, it is a better solution than losing group benefits altogether and having to purchase more expensive individual insurance. It can make the transition between jobs less risky and financially dangerous.

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COBRA: What You Need to Know (Bull & Bear Essentials, 8/16/09)
Bernanke v Congress: "Like a Viper and a Cobra Discussing Trade Secrets" (Jr Deputy Accountant, 7/22/09)
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Read more on Cobra at Wikinvest

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This entry was posted on Thursday, October 15, 2009 at 7:09 am and is filed under Health insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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