Learn about affordable health insurance plan options if you are eligible for COBRA. If you lose your employer-provided medical coverage, there are several options to consider before you select a policy for yourself and your family. We review your HIPAA rights and Marketplace options, so you can obtain quality healthcare benefits at the lowest available rate. Mandated coverage is guaranteed, with pre-existing conditions covered, and federal subsidies available, if you qualify.

Losing your job also qualifies as an SEP (Special Enrollment Period). This event allows you to choose  a single Marketplace plan (individual or family) without medically qualifying. You also become eligible for federal subsidies as long as you meet citizenship and other general requirements. You may also qualify for “cost-sharing,” which entitles you to purchase a Silver-tier policy with lower deductibles, copays, and maximum out-of-pocket expenses.

If you worked for a company with 20 (or more) employees, or you were employed by a federal or government Agency, you should be eligible. Also, at the time you left the company, you would have had to be covered under their Group plan.

Consolidated Omnibus Budget Reconciliation Act

The Consolidated Omnibus Budget Reconciliation Act of 1985 has protected millions of Americans, and saved individuals and families significant amounts of money by offering to continue their group healthcare coverage up to 18 months. Children, spouses, and ex-spouses are also eligible to purchase benefits, although the continuation policy may be more expensive than the work-provided policy since there are no employer-contributions.

You may be required to pay a 2% administrative fee,  which covers related expenses to converting to your own plan. However, if you are covered under the 11-month disability extension, the premium may be increased by up to 50% (extension months only). Also, a Federal Income Tax Credit (HCTC) may be available for reimbursement when you file your taxes in specific situations (example -  negative effects of global trade).

Generally, you are provided 60 days to apply for continuation coverage. During this time, coverage will be backdated to coincide with the date you terminated employment. During this election period, you are encouraged to also review and compare available Exchange plan options available in your state. You may keep the policy for 18-36 months, depending on your qualifying event. Since most COBRA situations are the result of employer-termination, the resulting benefit period is 18 months.

Private-sector companies must adhere to ERISA (Employee Retirement Income Security Act of 1974) guidelines. Requirements do include having to offer a specific tier of healthcare coverage, although adhering to ERISA regulations is mandated. NOTE: Remember, to obtain COBRA benefits, your previous employer had to be COBRA-eligible, only beneficiaries can obtain coverage, and  a qualifying circumstance/event must take place.

How Much Time Do You Have To Elect COBRA Coverage?

Although the number of days can vary, depending on the specific plan time limits, but the minimum is generally 60 days. Your “election period” begins when  you officially lose benefits or receive the election notice (whichever is later). Also, each qualified applicant can choose to accept or reject coverage, regardless of the decision that a spouse or dependent makes. Thus, it is possible for one spouse to elect COBRA benefits, while the other spouse and children choose to purchase an Exchange plan.

Typically, if your job position was terminated, or you were a victim of reduced hours, you are offered 18 months of benefits. This applies to the employee, his/her spouse, and all qualified dependents. The number of months increases to 36 if you are entitled to Medicare, or if  the death of the covered employee occurs. Divorce or legal separation also qualifies for 36 months of coverage (spouse and/or dependent children).

During the election period, if you decide not to accept coverage, you can later reverse your decision, and obtain benefits, if the election period has not ended.  Also, TAA (Trade Adjustment Assistance) allows qualifying persons to obtain continuing coverage. If eligible for readjustment allowances, a second opportunity may be granted.

Which “Qualifying Events” Lead To COBRA Continuation Coverage?

A qualifying event is a situation that forces you to lose qualified group medical coverage. Several of the most common events include:

Death of the employee resulting in a spouse or dependents becoming eligible for coverage.

Termination of the worker’s employment with no chance of immediate rehire. Gross misconduct must not have been the reason.

If the primary employee divorces, the spouse and children become eligible if they are losing coverage.

Reduction in employment hours. This reduction must be semi-permanent or permanent, and not temporary.

If the primary employee becomes eligible for Medicare, and qualified coverage is lost, the spouse and children are eligible for continuation coverage.

NOTE:  “Qualified Beneficiaries”  can also obtain coverage. Typically,on the day before the loss of coverage, these designated persons were an employee, the employee’s wife or husband, or a dependent child, that does not necessarily have to reside in the household. However, any child that was adopted or born during the continuation period qualifies for the conversion option.

Also, the following situations DO NOT result in a qualifying event.

Employee was not receiving benefits at the time of termination.

Employee was terminated because of  “gross misconduct.”

How Do You Know If You Are Eligible For Coverage?

An SPD (Summary Plan Description) illustrates your benefits, rights, and other pertinent information regarding your healthcare conversion options. Generally, within three months of your first day of coverage at your place of work, this packet is sent to you. Once received, you should always keep the information at home with other employer-related paperwork.

Once you no longer work for your employer, written notice will be provided, notifying you of specific dates, details, and deadlines. This notification must arrive within 30 days and you are provided 60 days (or more) to make a selection and enroll in an available plan. Providing notice of a qualifying event is generally the responsibility of the employer.

If there are significant changes to the plan, you are provided an SMM (Summary of Material Modifications) within 210 days following the end of that plan year. If there are benefit reductions, only 60 days is allowed from when the reductions became effective. You are always provided a copy of plan benefits or changes within 30 days of request.

However, once an employee is terminated, contacting the HR or employee-benefits department is highly recommended. If a financial institution (insurance company, for example) administers benefits, contacting the insurer directly may provide more time to review options. Decisions for dependent children can be made by either eligible parent. A child that has not reached age 18 can be represented by a parent or legal guardian.

NOTE: A “general notice” must also be sent to each employee and spouse. A description of rights is included along with other information. However, it can also be sent along with the SPD, and the requirement will have been satisfied.

Which Benefits Will Be Included?

Your converted coverage must identically match the benefits you were receiving while an employee of the company, or the plan benefits that are being offered to current employees. Thus, if  your major medical deductible was only $500, and there were no copays on primary-care physician (pcp) and specialist office visits, these benefits must be carried over. Maximum out-of-pocket expense limits (MOOP) will also not change. Life insurance and disability benefits are not included.

Doctors, specialists, medical facilities, and hospitals that were previously “in-network” should continue without interruption. However, each year, the provider network adds and subtracts participants, so an updated directory should be requested annually. Also, if any adjustments or changes are made to the master policy while you are receiving continuation benefits, those same changes would also apply to yourself. Children born or adopted during the continuation period will also be able to be added to the policy without any medical underwriting.

Can COBRA Coverage Be Taken Away?

You can lose benefits if certain situations occur. For example, if you don’t pay a current premium within the billing and grace period, the policy will terminate. Although you can request coverage to be reinstated, it is not an obligation of the carrier or your prior employer to comply with the request. The Employee Benefits Security Administration can provide assistance if your coverage was wrongfully terminated.

Also, if your prior place of work no longer offers group healthcare benefits to employees, once again, you may be without coverage. Eligibility for Medicare, or if you obtain other employer-sponsored coverage, will discontinue your existing benefits. Of course, any termination must be provided in writing in a timely manner. You may also choose to apply for a non-compliant ACA medical plan, although coverage may be limited, and pre-existing conditions may not be covered.

The best health insurance alternatives also include Christian medical coverage, which in selected situations, can provide fairly low-cost  options. However, specific guidelines and requirements must be met, and enrollment is not guaranteed.

Can Benefits Ever Be Extended?

Assuming you are currently covered for the standard 18 months of benefits, there are two scenarios that may allow you to continue beyond the normal expiration date.

Becoming Disabled – If just one person among all persons receiving benefits becomes disabled, than all qualified beneficiaries receive an additional 11 months of coverage. Thus, 29 total months of COBRA benefits would be afforded. However, the cost of coverage can rise by up to 150% during the 11-month period. The disability must be approved by the Social Security Administration, and occur during the first two months of coverage, and continue for the entire initial 18-month period.

Once no longer disabled, the 11-month continuation expires. When the SSA determines the disability no longer exists, often, the plan administrator should be notified.

Additional Qualifying Event – Examples include employee becoming Medicare-eligible, death of primary employee, legal separation or divorce, and loss of a dependent child. The SPD will contain specific information regarding how to notify the plan administrator details of the event. 60 days is typically the time-period provided to file the claim. NOTE: 36 months (instead of 18) of continuation coverage is offered if the employee enrolls in Medicare, legal separation or divorce, death, or loss of the dependent child status.

What Is HCTC?

HCTC is a “Health Coverage Tax Credit” that can assist with paying monthly premiums. However, several conditions must be met to qualify for the rate reduction. Several obscure situations include being impacted from global trade, or if the Pension Benefit Guaranty Corporation is paying you a pension. If you are fortunate enough to qualify for HCTC assistance, about 3/4 of your premium will be paid by the program.

When your tax return is filed, a credit is requested for the reimbursable amount you paid. However, full advancement of monthly payments is expected for 2017. Important Note: Beginning in 2016, you were no longer allowed to use Marketplace plans for the credit. Also, this credit expires in 2019, unless renewed. However, the IRS has determined that all plans that qualified for the HCTC through 2013, will continue to earn the credit through 2019.

Qualified applicants can file IRS Form 8885  (Health Coverage Tax Credit) when your federal form is completed. Special instructions are provided, although some documentation may be needed. You will also need to verify that your premium has been paid and that the coverage was “qualified.”

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