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Cobra 60 Day Election Period


Cobra 60 Day Election Period

The Cobra 60 day election period is essential to those individuals who have been laid off or involuntarily terminated. Unfortunately, corporate layoffs have risen over the past few years. In fact, layoffs have become so common that there are many well-qualified individuals who have settled for part-time work at local convenient stores in order to make ends meet. The Cobra 60 day election period becomes essential because it gives an individual time to pursue all health insurance options and determine which option will best suit him/her.

Once an individual has been laid off or involuntarily terminated, he or she has 60 days to elect Cobra coverage. During the 60 day period, the individual may investigate cobra options as well as individual health insurance quote options. Typically, individuals find that the cost of their cobra care is more costly than their previous coverage. This leads to the popular misconception that Cobra itself is expensive. Cobra (Consolidated Omnibus Budget Reconciliation) is an Act adopted in 1985 that enables individuals who have been involuntarily terminated to continue their current health care plans for a designated time frame (based on the state and number of people employed by the employer). The fact that the act allows for an individual to continue their current health plans means that an individual has access to the exact same health coverage as they did prior to being laid off (including the same cost). Typically an individual’s employer will pay a portion of the individual’s health care. Many times the amount that the employer pays could be up to fifty percent. Being that the individual has access to the same health coverage and cost under a cobra plan, the additional cost (previously covered by the employer) must be covered by the individual. For the sake of clarity, we’ll provide an example below:

Tom has a (employer group) health plan that requires Tom to pay one hundred dollars per month. Tom’s actual plan cost two hundred dollars per month. However, his employer pays fifty percent of his monthly cost. Once Tom has been laid off, he is eligible to elect Cobra for health coverage continuation. Cobra will allow Tom to keep his current coverage and cost. However, Tom’s employer is not required to pay the fifty percent of his monthly cost. Therefore, in order for Tom to keep the same plan, he must now pay two hundred dollars per month (the full monthly cost).

Based on the example above, Tom could use the Cobra 60 day election period to his advantage in a couple of ways. First, Tom does not have to immediately elect Cobra. He can use the sixty days to research individual health plan options. Many times, an individual health plan would be a cheaper option for Tom since individual health plans are based on the health of the individual vs. Toms previous employer group plan based on the general health dynamic of a group. Second, Tom may be one of the lucky ones who finds a new job and/or insurance quote quickly. If Tom’s new job allows health coverage to start prior to 60 days from his previous termination, Tom could use the Cobra 60 day election period to his advantage. In this instance, Tom could actually save the cost of insurance during the cobra 60 day election period as long as he does not get sick. If Tom’s new insurance starts within the 60 day period then Tom would simply not elect Cobra. However, if Tom’s coverage starts on day 50 of his termination and Tom gets sick on day 40, then Tom would benefit from the Cobra 60 day election period and be covered based on his previous health coverage. The downside to this is that Tom would have to pay the cost of the Cobra for the previous month (the full 60 days). However, at least Tom would have options. Knowledge is power.

Stay tuned and stay informed!