If a consumer loses job-based health benefits, he or she may be eligible for COBRA, short for Consolidated Omnibus Budget Reconciliation Act of 1986. COBRA provides the option of continuing a employer-sponsored health plan for a limited period of time. Is it the best option? Here’s a quick Q & A to break down some of the stipulations.
What does having COBRA mean?
This means a consumer continues to be covered under the employer-sponsored plan, but the cost of coverage could change. For example, the former employer may no longer pay any of the premium, or may offer to pay the premium for just a few months as part of the employee’s severance package.
How long can a consumer have COBRA?
COBRA continuation of coverage lasts for 18 months but in some cases, it’s extendable to 36 months. If the employer terminates the group plan, the employee’s COBRA coverage will also terminate.
The election to take COBRA benefits must be exercised within 30 days of the last day of employment. COBRA is considered minimum essential coverage, and enrollment in COBRA satisfies the requirement to have health care coverage.
What if a consumer does not want COBRA?
If the consumer decides not to take COBRA coverage, they can enroll in a qualified health plan through Maryland Health Connection instead, even if it’s outside of open enrollment. Loss of employer-sponsored coverage qualifies for a Special Enrollment Period, so the consumer can enroll within 60 days of the loss of employer-sponsored coverage (usually the last day of work).
If the consumer already has COBRA coverage, then the consumer can only switch to a marketplace plan if one of the following events occurs:
- The COBRA continuation coverage period has expired.
- It is open enrollment for Maryland Health Connection plans.
- The consumer qualifies for a special enrollment period due to a qualifying life event such as marriage or the birth of a child.
- The consumer’s COBRA costs change because the former employer contributed to the cost for a period of time but then stopped contributing.
- The consumer’s COBRA coverage ends because the employer’s group plan is terminated.
Medicaid enrollment is any time throughout the year.
The consumer may apply for Medicaid at any time. If the consumer is eligible for Medicaid, he or she does not have to wait until the open enrollment period or until COBRA coverage ends to enroll in Medicaid.
COBRA versus Maryland Health Connection coverage:
A consumer should use the “Get an estimate” tool to compare the cost and benefits of Maryland Health Connection coverage with that of COBRA. It is important for the consumer to know his or her options when making a decision.
For extensive details on COBRA health coverage from the U.S. Department of Labor, please click here.
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