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COBRA works for most displaced employees, retirees, their dependents and spouses, divorced or separated spouses and dependents who have lost their dependent status.  When an event occurs that might cause an individual to lose their coverage under a group health insurance policy, COBRA, which passed into law in 1986, provides the opportunity for those individuals to continue the previous coverage.

Under the provisions of COBRA, qualified beneficiaries who undergo qualifying events are entitled to a continuation of their current health insurance, including prescription, dental and major medical insurance without interruption.  The beneficiary must pay for these COBRA benefits, but there are many reasons to continue COBRA Health Insurance.

In November, 2008, more than 2,300 American companies laid off more than 50 employees each.  These staggering numbers may well continue into 2009.  COBRA protects these workers and their families.  With the ever-rising cost of health care, most individuals and families need health insurance more than ever.  Unfortunately many qualified beneficiaries are either unaware of the rights or do not understand how to keep their health insurance when qualifying events occur.

Under COBRA, a qualified beneficiary is an individual who was covered by a group health plan on the day before the occurrence of a qualifying event.  The qualified beneficiary must be either the employee, the spouse of the employee or the employee’s dependent.  If an individual is covered by a group policy but is a subcontractor, agent or director, they may also be entitled to continued health insurance through COBRA.

A qualified event is an event that could cause a covered employee to lose their health insurance.  The qualifying event determines who the qualified beneficiaries are and the amount of time for which the COBRA Health Insurance is available to the beneficiary.  Following is a list of qualifying events for qualified beneficiaries:

Qualifying Event for Employees:

1. The employee voluntarily terminates employment for reasons other than gross misconduct.
2. The employee is terminated for reasons other than gross misconduct.
3. The employee’s work hours are reduced significantly         

Qualifying Events for Spouses:

1. Voluntary termination of employment by a covered employee for reasons other than gross misconduct.
2. Involuntary termination of employment by a covered employee for reasons other than gross misconduct.
3. Significant reduction in work hours for the covered employee.
4. Entitlement of the covered employee for Medicare benefits.
5. Either divorce or legal separation from a covered employee.
6. Death of a covered employee.

Qualifying Events for a Dependent Child:

1. Loss of dependent child under the rules of the health insurance plan.
2. Voluntary termination of employment by a covered employee for reasons other than gross misconduct.
3. Involuntary termination of employment of a covered employee for reasons other than gross misconduct.
4. Reduction in work hours for the covered employee.
5. Entitlement of the covered employee for Medicare benefits.
6. Either divorce or legal separation of the covered employee.
7. Death of the covered employee.

COBRA offers continued health insurance for qualified beneficiaries in each of the above mentioned events.  In most cases, the insurance can be used for a minimum of 18 months, and, in certain circumstances, the coverage can be extended.

Beneficiaries of a qualifying event can continue uninterrupted health insurance without fearing exclusion due to pre-existing conditions.  While the beneficiary must pay for the insurance, it often serves as a bridge between coverage at a new job or until work is located. 

Today, employees usually must work for a defined time period before group health insurance is offered.  Many companies are reducing their contributions to employee health plans.  Persons seeking advice about COBRA health insurance or the enrollment process are prudent to seek assistance from a COBRA expert who can explain the qualifications and all procedures. 

George L. Fox, LUTCF, serves as Vice President of Planning Financial Futures, Inc. He is a lifetime resident of Long Island and lives in Huntington with his wife, Vicki, and their three children. George is a graduate of the State University of New York, NYIT and the College for Financial Planning.

Source: http://www.cobrahelpcenter.com

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