After the shock of losing your job wears off, the reality of being unemployed sets in. One of the most important decisions you have to face is what to do about health care insurance now that your employer is no longer providing it. If you’re like many people, that means exercising your COBRA rights.
COBRA health insurance provides for the continuation of group health coverage when you quit, retire or are fired from a job that offered a qualifying plan. It can also be applied if your hours are reduced so that you no longer meet your employer’s criteria for plan eligibility. The only exception is dismissal for gross misconduct. While COBRA rules don’t define what gross misconduct is, some employment law experts suggest it be reserved “for criminal activities that can be proved,” according to an article in Compensation Daily Adviser (10.10.11). Other, less conservative experts cite being rude to a customer or willfully engaging in conduct that harmed the employer as justifiably sufficient to deny COBRA benefits. However, the same article cautions, that if your works hours were reduced as a disciplinary action for gross misconduct, you still qualify for COBRA benefits. The point here is that the gross misconduct standard is not carved in stone. If your COBRA benefits are denied, you may want to consult an employment law expert.
Under certain conditions your spouse, former spouse and dependent children can also be eligible for COBRA benefits. Triggering events can include the death of a covered employee; divorce or legal separation of a covered employee from a spouse; and a dependent child who ceases to meet
dependent status of a health care plan.
If you decide to exercise your COBRA rights, you have 60 days from the triggering event to apply. Be aware that you will be picking up the entire tab. While the group rate is generally more advantageous than
individual health insurance rates, plan to experience sticker shock. But even with the big price tag, there are definite benefits to maintaining continuous coverage until you can find another job, especially if you’re older or have health issues. Under COBRA, you must be offered the same coverage you had immediately before you qualified for COBRA continuation coverage. Any change to the group plan for active employees will also apply to you, and you must be allowed to make the same choices they may be given, such as plan options offered during open enrollment. COBRA also caps the premium you can be charged. Currently, it can’t exceed 102 percent of cost of the plan, including what’s paid by employees and the employer, plus 2 percent for admin costs.