COBRA, specified by the Consolidated Omnibus Budget Reconciliation Act, is a supplemental continued group insurance coverage for employees leaving the company. It is, however, only a temporary form of health insurance that may be offered to eligible former employees. The aim of the insurance protection is to fill in the gap in the individual’s and dependents’ health coverage through a limited extension of the health insurance plan provided by the employee’s most recent employer. The coverage is meant as a transitional measure to provide a family medical insurance over a short term period.
COBRA rates may be competitive with offerings from other insurers, so premium costs and coverage can be compared. COBRA covers physician, outpatient, and hospital care but normally does not include extended hospitalization, prescriptions, and surgery — all the more reason for a separating employee to compare private insurance services’ coverage and costs.
It is worth noting that COBRA insurance may seem at first to be more affordable than private medical insurance, but the recipient may end up paying more than they did when employed, because the company is no longer subsidizing the insurance cost.
Certain restrictions apply to eligibility for the COBRA benefit when the employee is voluntarily or involuntarily terminated, so the departing employee should check eligibility with their former employer’s HR department.
HR Knowledge is familiar with the subtleties of COBRA and can relieve you of having to deal with the details of administering the plan benefits.
To learn more, please contact us.