Should you plan to elect the COBRA coverage? • If you do elect COBRA coverage, what are some important considerations to make sure your health insurance coverage is not interrupted?
Understanding Your Employee Benefits: Continuing Health-Care Insurance You’ve just given notice that you plan to leave your job. You have another job, which begins in a month, but you plan to take some time off before you start. Your final day at your current job is at the end of next week. You are meeting with the human resource manager to discuss terminating your employment with the company. You want to make sure you understand your final paycheck and the termination of your benefits with the company. In particular, you want to learn what happens with your health insurance after you leave. You participate in your current company’s health insurance plan and have coverage for you and your family. The company pays most of the premium, but you contribute $200 per month for the coverage. You’ve examined the benefits information from your new employer and know that you will be able to enroll in its health insurance plan after 90 days of service. You are concerned because you know that your coverage with your current company will end as of the day you leave the company, leaving nearly four months before you are covered under your new plan. Further, as the parent of young children, you know that you are likely to face a need for health care during that period. You are told by the human resource manager that you will receive a letter regarding your rights under the Consolidated Omnibus Budget Reconciliation Act (COBRA). This letter will explain your option to continue your health insurance at your own expense after you leave the company. You will be required to pay the full premium for the insurance, which includes what your company previously paid plus your normal monthly contribution. You also must pay a 2 percent administrative fee each month. The human resource manager lets you know that the total monthly premium for your coverage is $1,200.00, so you know that with the administrative fee, your monthly payment for the coverage will be $1,224.00. This amount alarms you, as you will be without a paycheck for a few months. The human resource manager reminds you that you are not required to elect the COBRA coverage, but there is some risk in not taking it. If you or one of your family members has an accident or some other urgent health-care need, the expenses may be significant. The human resource manager advises you to make sure that you carefully review the COBRA letter before making your decision. • Should you plan to elect the COBRA coverage? • If you do elect COBRA coverage, what are some important considerations to make sure your health insurance coverage is not interrupted?