What is COBRA ? Is it Health Insurance?

COBRA (Consolidated Omnibus Budget Reconciliation Act) is a U.S government agency concerned with providing continuity of health insurance to employees who left their jobs. This is an insurance program passed by the U. S Congress and signed by Ronald Reagan.

Purpose

COBRA is there to step in when the unexpected happens after loss of employment, as well as some other unexpected life situations. Examples are the following: death of the person covered in the insurance, an employee loses eligibility due to involuntary termination except for grave misconduct, divorce or legal separations that enables the spouse to be covered, and a dependent child who reaches the age that he or she is no longer covered to the insurance benefits.


COBRA allows coverage for up to 18 months, unless the person is deemed disabled by Family Social Security Administration, in which case the coverage can reach up to 29 months. In the case of divorce, coverage can last up to 36 months.

COBRA however does not provide coverage if the person has been terminated because of his own fault or the employer has gone out business.

COBRA allows the former employee to pay in full what the employer has previously paid for. Employees loose their coverage if they fail to make timely payments for these premiums.

Only 10% of Americans eligible for COBRA insurance enrolled in it in 2006 because they were not able to pay the employer in full after they left their jobs. The American Recovery Investment Act of 2009 passed by the House of Representatives provides 65% of people eligible for COBRA with 9 months of insurance. While some employees voluntarily help subsidize or fully cover the cost of insurance as part of a termination or exit package, commonly ex-employers pay for the entire cost.

However specific provisions and responsibilities may vary depending on the state, as in mini-COBRA plans for fewer than 20 employees. Those eligible for this subsidy are called Assistance Eligible individuals (AEI).

Employers who are subjected to Federal COBRA must:

* Inform terminated employees of their rights under ARRA by sending a series of notifications.

* Provide methods for Qualified AEIs to apply

* pay the 65 % subsidy and seek payment by filing the Amended form 941
COBRA is a way for the government to help temporarily those who are in immediate need of financial assistance especially for health care.