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I was laid off from my job. What happens to my health insurance? How does COBRA work?
You might be able to temporarily continue your health insurance benefits.
The federal law known as COBRA protects the health insurance of workers who are laid off, as well as spouses and dependents of those workers, in certain situations. It enables you to keep your benefits for 18 months if you worked for a company that had 20 or more employees (including part-timers).
Your former employer must be continuing to offer a health plan to its existing employees. If your former company goes out of business, decides to discontinue its group health plan or you were dismissed for "gross misconduct" on the job, you would be ineligible for COBRA.
You may be responsible for paying the full monthly premiums that your employer previously paid, plus an administrative fee (up to 2 percent). According to a 2009 study, "Squeezed: Caught Between Unemployment Benefits and Health Care Costs," by the nonprofit advocacy group Families USA, a single person paid an average premium of $388 per month for COBRA premiums in 2008, $1,069 for families. Fortunately, the federal government is offering a subsidy of 65 percent if you became eligible for COBRA from Sept. 1, 2008, to Dec. 31, 2009.
The alternative to COBRA is trying to find an individual health plan — or getting onto another group plan. The expense of an individual or family plan may be more or less expensive than COBRA for the same benefits, depending upon the type of plan you choose, so it's wise to shop around for the best deal. But remember, individual plans are medically underwritten. Most insurance companies will decline to offer coverage to applicants with a serious illness and will also exclude pre-existing conditions from coverage. This makes COBRA an especially good option for someone with an existing illness.
It's a good time to know your COBRA rights.
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