COBRA (Consolidated Omnibus Budget and
Reconciliation Act) Continuation Coverage has been a very helpful
federal law that allows persons covered under a group health insurance
plan to continue on the coverage after regular eligibility for the
coverage is lost, e.g., an employee ceasing to be employed; a spouse
who divorces the employee; a child reaches the age when she is no
longer eligible for dependent coverage. It was an important law when
passed, as health coverage was otherwise lost when employment stopped,
and to buy individual health insurance before Obamacare, a person had
to prove they were in good health with no medical problems or serious
Now, with the implementation of
the Affordable Care Act (Obamacare), COBRA may still be beneficial
although it is no longer the only way for a person with a medical
condition to continue to have health insurance coverage.
However, COBRA Continuation Coverage has serious drawbacks:
Coverage only lasts a brief period of time, and before Obamacare the choices of coverage after COBRA were greatly restricted.
Coverage is expensive.
Although the benefits were often broad, the COBRA Continuee is
expected to pay the full premium including the portion the prior
employer paid plus a 2% “administrative” charge. If a disabled COBRA
Continuee qualifies for the disability extension, the premium becomes
50% more than the employer pays.
The Continuee’s coverage remains at the mercy of the former employer.
If the employer changes carriers or drops health insurance altogether,
the coverage and cost may change or be lost completely.
Now, however, Obamacare offers a
choice for people being moved to COBRA coverage. Loss of the regular
employer based coverage creates a Special Enrollment Period which
allows a person to purchase a plan on the health exchange as long as
they do it within 60 days of the coverage ending, according to the
termination date given in the COBRA Notice letter from the employer or
Under Obamacare, based on your
income, tax credits may be available to assist with the premium
payments, which would not happen if you remain with COBRA. Also, there
is a wide variety of plans, coverages, and prices to choose from.
law gives you 60 days from the date your coverage terminates to accept
COBRA coverage, and it must be reinstated back to the date the regular
coverage stops. It may also take 30 to 60 days after applying for an
Obamacare policy to go into effect, depending on the exchange used in
your state. To be safe, many people accept COBRA coverage, then drop it
once the Obamacare policy is in force.
Be aware, also, that once the 60
days of the Special Enrollment Period for Obamacare has passed, you
will not be able to enroll in an Obamacare plan until the next open
enrollment or at the expiration of the COBRA coverage.
COBRA as an Alternative
For those who may want to consider COBRA, below is a
brief summary of the law. Since Obamacare is an excellent, as well as a
usually less costly, alternative for many, this will focus on those
undergoing treatment who have a special need or desire to maintain
their current coverage and medical team.
COBRA coverage is limited,
usually to 18 months for terminating employees, and to 36 months for
dependents losing eligibility, either through divorce, dependent child
aging out of coverage, or death of the employee.
In 1989 COBRA was amended under a
law called OBRA (Omnibus Budget and Reconciliation Act) to allow
people who had to stop work due to disability to extend the time they
could keep COBRA Continuation. Under this law, someone who qualifies
may stay on their employer’s COBRA Continuation until they become
eligible for Medicare, which is normally 29 months after they leave work
due to disability. This is because Social Security Disability
Insurance (SSDI) benefits are not payable until you have been disabled
for five full calendar months. Those five months plus the twenty-four
months of SSDI benefits required to become eligible for Medicare add up
to 29 months.
However, to qualify for this disability extension of COBRA you must meet several requirements:
You must apply for Social Security Disability Insurance (SSDI) benefits.
Social Security must approve your claim for disability benefits AND notify you during your initial 18 month COBRA period.
The Onset Date of your disability must be no later than 60 days after the start of your COBRA coverage.
Finally, you must provide a
copy of your Social Security Notice of Award letter to your COBRA
administrator within 60 days of receiving it AND within the 18 month
Now, for a practical look at each of these requirements:
COBRA can be a good way to
stay insured since it allows you to stay on your employer’s health
insurance plan until you become eligible for Medicare. The primary
drawback is that during the months after the first 18 months of COBRA,
the employer can (and will) charge you the actual premium PLUS 50%. If
you were paying $500 per month on COBRA, the extended months will cost
$750 per month.
- COBRA is letting Social Security decide who was
disabled when they stopped working. If you didn’t pay into Social
Security because you were a public school teacher or government
employee and are therefore not “financially eligible,” Social Security
will still review your medical records to see if you are disabled
enough to have qualified for benefits if you had been eligible. Such
persons will need to tell Social Security that they are applying to
extend COBRA to have such a claim reviewed.
- The SSDI claim must be approved during the
original 18 months of COBRA. If there is a denial and you have to wait
to appeal before an Administrative Law Judge, and it goes beyond 18
months, you lose your chance to extend COBRA even if your claim is
- Social Security will determine the onset date of
your disability. That is the date they believe you became disabled and
the first of the following month is the date they start counting the
five calendar months waiting period. Even if the approval letter comes
in the last few months of your COBRA Continuation, you can still
qualify for the extension if the Onset Date given in your approval
letter is within 60 days of the COBRA Qualifying Event, usually the
last day of the month in which you stopped working.
- The COBRA administrator MUST be informed of your
approval for Social Security within 60 days of the receipt of the
Notice of Award letter. It is assumed that the letter was received by
you within five days of the date of the letter.
Unfortunately, ignorance or misunderstanding of
this rule has cost many people their right to stay on COBRA. Too many
people don’t think about extending their COBRA until it is almost over,
and that can be too late to get the extension.
The COBRA administrator is usually your old
employer or they may have contracted with an outside firm to administer
their COBRA people. A good rule of thumb is that the copy of the
Social Security Notice of Award letter should go to the same place that
you send your COBRA premiums. Follow up to confirm the notice was
received and ask for written confirmation of eligibility for the
Thanks to the Affordable
Care Act (Obamacare), there is now a good alternative to the high cost
of continuing the employer’s coverage through COBRA for persons dealing
with HCV who lose their employer coverage.
Labels: Affordable Care Act (ACA), COBRA, Disability & Benefits, Jacques Chambers, Obamacare