The Consolidated Omnibus Budget Reconciliation Act, or COBRA, has been on the books since 1986, but confusion about the law continues. A number of myths circulate regularly, and employers and employees seem to believe many of them. Take a look at these five COBRA myths to learn essential facts about this important insurance coverage.
“Every Employer Provides COBRA Coverage”
COBRA applies only to employers who have at least 20 or more people working for them. Employees may work on either a full- or part-time basis, with the part-time employees counting as a fraction of a whole employee. It's also important to understand that employers who do not offer any healthcare coverage do not provide COBRA insurance. It may sound as if people working for smaller companies are being unfairly excluded. However, most states have insurance programs that operate much like COBRA and apply to smaller organizations.
“Only Fired Employees Qualify for COBRA”
The law allows COBRA insurance for employees who are affected by a number of different life changes. These are known as "qualifying events" and range from job loss to divorce. Essentially, workers may be eligible for COBRA insurance in the aftermath of many different transitions. Being laid off, voluntarily leaving employment, or experiencing reduced working hours may all entitle the worker to COBRA. The law is designed to help workers and their families maintain healthcare coverage for a specified period of time when a qualifying event occurs and those events go far beyond just getting fired.
“No Action is Required for COBRA Benefits to Start”
In reality, both you and your employer must do several things within specified time periods in order for your insurance coverage to continue. When you lose health plan eligibility, your employer must provide you with a notice regarding your rights under COBRA. Your employer is also required to notify the company's insurance plan administrator within 30 days, who in turn is required to provide you with information within 14 days. An additional 60 days is provided to the employee to decide whether or not to continue coverage. Accepting the coverage means that premiums must be paid within 45 days.
“COBRA Coverage Isn't the Insurance You're Used To”
Under COBRA, you'll have the same insurance plan as before. This means you continue working with your doctor as usual. The only difference is that you are now responsible for the premiums. Your level of coverage remains the same.
“New Health Care Laws Make COBRA Obsolete”
The newest health care reform laws actually have little or no effect on COBRA. Because employer-sponsored insurance coverage is still an option, COBRA remains a necessary component of the insurance landscape. It is true that health care reform essentially requires everyone to have insurance. However, many people will experience the major life changing events that will require a transition period. COBRA is still an integral part of ensuring good health for you and your family.
