All About COBRA


All About COBRA

Being Alive Newsletter; November 1992
John Horning

If you are covered by a group health insurance plan of your employer, you realize how important this benefit can be. You might also wonder what will happen if you quit your job or go on disability leave. In 1985, Congress passed a law that allows you to continue your insurance coverage for a limited period of time. This law is known as the Consolidated Omnibus Budget Reconciliation Act and the benefits it provides are known as COBRA benefits.

You are eligible for COBRA benefits if you work for a company with 20 or more employees and you quit or are fired for any reason other than gross misconduct. Coverage generally can be continued for 18 months, unless you are disabled in which case you can keep your benefits for up to 29 months. COBRA benefits are also available to spouses and children of covered employees.

If you qualify for COBRA benefits, your coverage will be identical to the coverage provided under the group health plan. You will have to pay the entire premium for coverage plus a small administrative fee. Premiums reflect the total cost of the group health coverage including both the portion paid by employees and any portion previously paid by your employer. If you are disabled, your cost can be increased after 18 months.

Your employer must notify you when you become eligible for COBRA benefits. You have 60 days to accept the coverage. If you do not accept within 60 days, you lose all rights to benefits.

If you change jobs, your new employer's group health plan may have a preexisting condition clause. This means that you will not receive any benefits for the treatment of any medical conditions you had at the time you were employed. Preexisting condition clauses usually expire after one year after which you will receive full coverage.

You can use your COBRA benefits from your prior employer to cover your preexisting condition. For example, Ken (who is HIV+) changes jobs. Because of a preexisting condition clause in his new employer's plan, he will not receive any benefits for HIV treatment during his first year of employment. Ken can pay for COBRA benefits from his prior employer so that expenses for HIV treatment will be covered. When the preexisting condition clause expires after one year, he can stop paying for his COBRA benefits because his HIV related expenses will now be covered by his new employer.

COBRA also applies to dental, vision and prescription drug plans. It does not apply to group life insurance although these plans generally allow you to convert your coverage to an individual policy without regard to your health status.

The cost of COBRA benefits can be surprisingly high, but with the cost of HIV treatment being what it is the availability of COBRA can result in substantial savings.


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This information is designed to support, not replace, the relationship that exists between you and your doctor.
©1992. AEGIS.