A month after I quit my job to write full-time, my husband was let go from his job. Oh, and we’d also just learned I was pregnant. It was a fun week.
Since we live in the United States, losing his employer meant losing our health insurance–but you can’t not have health insurance when you’re pregnant. Unfortunately, new insurance providers we looked into considered a baby a “preexisting condition,” so we turned to COBRA (not the G.I. Joe one) in desperation.
What you need to know about COBRA
You might have heard of COBRA health coverage, but most people don’t really understand it–I know I didn’t. Here’s what you need to know.
What is it? Before 1986, if you lost your job, got divorced, or changed jobs, you were out of luck in terms of keeping your health insurance, but that year Congress passed the Consolidated Omnibus Budget Reconciliation Act. COBRA required most group insurance plans to let individuals pay to keep the plan for a limited time–18months, and up to 36 months in certain circumstances.
Who can get it? COBRA is available for any “qualified beneficiaries” that go through a “qualifying event,” which tells you precisely nothing. What it means in actual English is that you can be covered if you:
• Are an employee losing coverage (for reasons other than gross misconduct).
• Are married to a person losing coverage.
• Lose your insurance because you’re listed on your spouse’s plan and you’re getting divorced.
• Are a dependent child of a person who’s losing their coverage.
How expensive is it? In a word: very. Your actual cost will be 100% of the plan (as opposed to the portion you paid when employed), plus you’ll usually owe a 2% administrative fee. You may be surprised by just how high that is. In 2012, the average annual premium for family health insurance was $1,312 per month, according to The Kaiser Family Foundation. Tack on that 2% fee and you’re looking at $1,338 per month. Luckily, COBRA coverage isn’t an all-or-nothing proposition. Even though my husband was the primary plan holder, we decided to only cover me and get him a cheaper plan elsewhere. Even then, just paying for me was $500 a month.
What are the terms? Legally, employers are required to let the insurer know within 30 days if you go through a qualifying event, unless it involves a divorce, separation, or loss of dependent child status–then it’s your responsibility. Every plan is different, but you always have at least 60 days to do this. Within 14 days of receiving that notice, the insurance company has to send information on continuing your coverage through COBRA. You get another 60 days after that to decide whether or not you want to do it.