Situations in Which COBRA Health Insurance Continuation Coverage are Useful

Part 4, Chapter 12: Specialized Situations: Extending Coverage through COBRA, the Portability Act, and Conversion Options Page 2

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Once a health insurance policy has been extended under COBRA, claims may still be processed by the previous insurer, and claim rules will remain the same. However, the premium will be based on the cost of the existing health insurance policy plus a 2% fee. That rate is generally stated as "102% of the premium." The premium, of course, varies from policy to policy. You can obtain the exact premium for continuing your health insurance policy under COBRA from your employer's benefits office.

The extension of health insurance benefits under COBRA may be particularly useful in situations in which

• an individual has retired and is no longer covered by an employer-sponsored group health insurance plan, but still has a few months to wait until eligibility for Medicare occurs;
• an individual is between jobs and wants to continue health insurance coverage temporarily;
• a child is no longer covered under a family's health insurance plan because of age, but is not yet eligible for health insurance through his own employment;
• a spouse is no longer eligible for health insurance coverage due to divorce or to the death of the employee.

The length of time for which a COBRA extension is available depends on the qualifying event, the reason for which the COBRA extension is required. If the qualifying event is the loss of health insurance coverage due to termination of employment or a reduction in hours, an eligible employee may be entitled to a continuation of health insurance benefits for up to 18 months.

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