By Martine G. Brousse
Patient Advocate, Certified Mediator
December 13, 2023
COBRA: not the cute little reptile that likes to sway to flute music and bite things.
So what is it, how does it work, and what should you know?
A. WHAT IS IT?
It is the Consolidated Omnibus Budget Reconciliation Act, the law passed in 1985 that:
1. allows employees to continue on their existing health insurance plan if:
· Their work hours are reduced, and they no longer qualify for coverage,
· They leave the job voluntarily or are fired (without misconduct)
· Certain circumstances apply: see B.
2. forces companies with more than 20 employees to provide access to the company’s group plan to those employees and their dependents
B. WHO IS ELIGIBLE?
· Employees who worked at a public or private company with 20 or more employees
· Employee was fired without misconduct or quit, or the hours were reduced and the employee is no longer eligible to receive health coverage
· Dependent who turns 26 and is dropped from coverage
· Employee’s dependents when employee becomes eligible for Medicare
· Employee’s dependents when employee passes away, or in case of divorce
· Employees who are currently eligible and enrolled in the group plan
C. WHAT DOES IT MEAN?
· Employees and their dependents can keep the current group coverage for 18 months (36 in some cases)
· Employee’s dependents can keep the current group coverage even if the employee is no longer on the plan
· BUT PREMIUMS MUST BE PAID IN FULL BY THE EMPLOYEE
· An administrative fee (2% usually) will be added
D. HOW DOES IT WORK?
· At the time of loss of coverage, employer must notify the plan and the employee that coverage is terminating
· A COBRA application is sent to employee, who must file an application to opt-in within the time limit of 60 days (from loss of coverage)
· Employee must pay first month’s premium within 60 days or face final termination
· DURING THE TIME THE EMPLOYEE DECIDES, AND FILES THE PAPERWORK, COVERAGE WILL BE TERMINATED AND CLAIMS DENIED
· Coverage will be re-instated once paperwork is on file with the insurer, premiums applied and the system updated. Claims can then be reprocessed and paid.
E. COST CONSIDERATIONS
· Cost of premiums (your employer’s and your share) + administrative fees = (much) higher premiums with the same benefits
· If your employer switches to a new plan, you must be notified and apply for COBRA coverage for it
· Dependents who could get their own individual plan on the open market for cheaper premiums can be removed at opt-in time
· The employee could become a dependent on a spouse’s own policy at a lesser cost, and opt-out of COBRA
· Shopping for new plan options on the open market or Obamacare Marketplace could mean smaller premiums and subsidies (federal help to pay premium costs)
· Consider opting-out or cancelling COBRA coverage if eligible under a new employer’s plan
· Consider opting-out or cancelling COBRA coverage if eligible as a dependent under a spouse’s policy
F. SPECIAL CIRCUMSTANCES
1. Extension to 36 months in special cases:
· If the employee becomes eligible for Medicare while on COBRA
· In case of disability, divorce or death of the employee
2. States’ COBRA programs (“mini COBRA”)
· For employees of small businesses (less than 20 employees)
· May sometimes extend coverage to 36 months
· Requirements vary by State
G. IMPORTANT TIPS:
· Return the application and a payment promptly and follow up on progress. Your case goes through many hands and delays are common.
· Inform your medical provider that their payment will be delayed or denied for non-eligibility. They may need to contact the insurer to have denied claims reprocessed once coverage has been reinstated
· If you have already met your max out of pocket, COBRA premiums may be cheaper than having to pay for a new out of pocket with a new plan, especially if benefits are better.
Martine Brousse, the Medical Bill Whisperer, was a long-time Billing Manager before switching to the side of patients in 2013. At AdvimedPro, she applies her deep expertise and vast experience of the intricacies of resolving all types of medical bills and claim payment issues in ways that directly and positively impact her clientsʻ finances.
Her YouTube channel videos offer answers, insights and solutions, educating and empowering patients about the healthcare system
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