COBRA Extended Health Insurance Benefits

If you're covered by an employer-provided group health insurance plan, then your employee rights might entitle you to COBRA extended heath insurance benefits if you quit or get laid off or fired from your job, for reasons other than gross misconduct.

If you're a dependant of an employee who is covered by an employer-provided group health insurance plan, but the employee dies or divorces you and your coverage ends because of the event, then you might be eligible for COBRA extended heath insurance benefits on your own.

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It's a Federal law that requires employers with 20 or more employees who voluntarily provide group health insurance benefits, to also offer temporarily-extended health insurance benefits to employees or their dependants when a "qualifying event" occurs.

Examples of qualifying events under the Act include layoffs, reductions in work hours, and the others mentioned above. Your employer or its COBRA plan administrator must notify you of your COBRA eligibility within a predetermined time period after a qualifying event occurs.

If you receive notice that you're eligible for COBRA insurance, then you will have a limited, but reasonable, amount of time to purchase the extended health insurance benefits at group rates, plus an administration fee of up to two percent if applicable. Because it's a temporary extension, your COBRA health insurance benefits will be the same as the health insurance benefits you previously had through your employer.

COBRA temporarily extends only group health insurance benefits. It does not extend disability or life insurance benefits. Extensions of other employee benefits are matter of agreement between employers and employees or employers and unions.

At this writing, your employee rights entitle you to purchase COBRA insurance benefits for 18 or up to 36 months, depending on your circumstances.

If your COBRA insurance benefits run out before you can become covered by a new employer-provided group health plan, then your employee rights under the Health Insurance Portability and Accountability Act (HIPAA) might entitle you to continue purchasing health insurance through a new plan, without pre-existing condition limitations and large premium increases.

Some states have enacted laws equivalent to the COBRA and HIPAA laws, that include or expand the minimum provisions in the Federal Acts. Your employee rights entitle you to whichever provisions are the most generous.

Although convenient and better than none, COBRA health insurance can be quite expensive. That's because employers typically do not pay partial or full COBRA insurance premiums, as they do when providing traditional group health insurance benefits.

In other words, you'll probably have to pay full COBRA insurance premiums on your own, plus the administration fee if applicable. If you're between jobs that might hurt you financially, just when you need money the most.

So, before purchasing COBRA insurance through your former employer, you might want to shop around for a better short-term health insurance deal through eHealthInsurance (affiliate link) or by other ways and means. If you can get between jobs with less coverage than you'll have through COBRA insurance, then your savings could be even more substantial.

If you shop around, be sure to investigate pre-existing condition limitations and other coverage differences.

See Health Plans & Benefits at the U.S. Department of Labor's Web site, to conduct further research on COBRA and HIPAA employee rights.