Between-Job Coverage: Coping With COBRA

Continuing Coverage Can Be Spendy, But Cheaper Than Emergency Room Costs

PORTLAND -- Leaving a bad job can be a frightening prospect, especially if you don't know where you're going to land next, which means giving up your health care coverage. But federal laws guarantee that you don't have to go without insurance for a significant period of time. Under two acts passed by Congress -- the Consolidated Omnibus Budget Reconciliation Act of 1985 and further strengthened by the Health Insurance Portability and Accountability Act -- everyone who leaves or is fired from a job (for any reason other than "gross misconduct") that offered them health insurance is entitled to extend their health benefits at their own cost, often at a lower rate than the market price for the health plan, for 18 months. COBRA allows employees to, simply put, purchase from their former employers their health coverage at the same price the employer paid.

COBRA kicks in during specific crises and transition times like divorce or death, covering the employee's spouse and dependants for up to three years.

Here's how it works. First, you must experience one of three "qualifying events" in order to trigger COBRA, and not every family member can qualify for coverage:

• Qualifying Event: termination of job, reduced hours
• Beneficiary Eligible for COBRA: Employee, Spouse, and Dependent child
• Maximum Coverage Time: 18 months

• Qualifying Event: employee becomes eligible for Medicare, divorce or legal separation, death of employee
• Beneficiary Eligible for COBRA: spouse, dependent child
• Maximum Coverage Time: 36 months

• Qualifying Event: loss of dependent-child status
• Beneficiary Eligible for COBRA: dependent child
• Maximum Coverage Time: 36 months

Generally, continuing your coverage under COBRA is expensive because you're still paying your contribution, plus the contribution your employer made, plus up to two percent for administrative costs, but often the cost is much lower than buying individual coverage. COBRA laws mandate the employee extending the benefits to keep up with the payments so the former employer doesn't default on its payments, and some of the other restrictions are cumbersome for both employers and former employees. However, if you have pre-existing conditions or a family, keeping coverage is essential and will make it easier to secure insurance in the future.

States have to right to modify COBRA benefits, as long as the modifications don't undercut the federal provisions.

More Information

• Oregon
• Cal COBRA
• Office of the Commissioner of Insurance State of Wisconsin
• The Insurance Division of the Minnesota Regulator of the Financial Services Industries site

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