The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a type of a health program that allows an employee and their dependents to continue to receive the benefits of the health insurance coverage in the event that the employee loses their job or has their work hours reduced. The program allows for the extension for a limited span of time given the employee has lost his or her job voluntarily or involuntarily, is transitioning from one job to another, due to factors such as death, divorce, and other life events.
COBRA was enacted in 1986 and is a federal law that allows the employees and their dependents to retain health insurance as long as they are willing to pay for it on their own. Individuals who are qualified and eligible are required to pay the entire premium for the health insurance coverage up to 102 percent of the plan cost. This might seem expensive and a financial burden, but the coverage cost is cheaper and more comprehensive than the private health insurance plans.
It is important to remember however that COBRA health insurance coverage plans cover the costs of prescriptive drugs, dental treatments, and vision care. It is not inclusive of life insurance and disability insurance. COBRA program is offered for a limited time period and from the qualifying date, the coverage extends up to 18 to 36 months, depending on the scenario.
Under COBRA guidelines it is required that group health plans provided by companies with 20 or more employees offer employees and their dependents the opportunity for a temporary extension of coverage (continuation coverage) a year ahead before coverage would otherwise end. Guidelines are also provided under COBRA that guides the employees in selecting the continuation coverages and is a useful resource for Northern California health insurance. It also applies to plans provided by private sectors as well as plans under the local and state government. COBRA also requires that the employees provide notice of the plans and the changes. Federal employees are also provided coverage under the law.
For employees qualifying for the COBRA coverage, COBRA offers coverage identical to the amount offered by the employers. All qualified COBRA beneficiaries can make the same choices as non-COBRA beneficiaries.
A qualified beneficiary of the COBRA program can continue to enjoy the opportunities available to him or her in the health insurance, including consulting the same doctor and rely on the same medical network providers. They also get the benefit of continuing the coverage for pre-existing conditions and daily prescribed drugs.
Eligible beneficiaries of the COBRA program, upon choosing COBRA can change their health insurance plans from the employers and choose a less expensive and more suitable plan such as the Health Maintenance Organization (HMO) or the Preferred Provider Organization (PPO). Beneficiaries may choose for tax deductions and reduce the burden of higher premiums. No matter the choices, it is necessary that the premiums for the COBRA program be made on time, otherwise, the beneficiaries will lose their coverage duration and become ineligible.