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Health Insurance Guide
COBRA Health Insurance Coverage
COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) is a federal law which is designed to ensure that people can continue to receive health insurance coverage for up to 18 months following the termination of his employment. Many, but not all, of the companies which offer group health insurance schemes to their employees are subject to COBRA. In certain cases
Cobra health insurance coverage may be extended from 18 months up to a maximum of 36 months.
COBRA insurance coverage protects people against losing their health insurance benefits when they lose their employment and is a temporary measure designed to help people through what is often a difficult time. Not every employee who loses his job will qualify for COBRA insurance but employers need to be conversant with COBRA health insurance law and have to be able to advise their employees on their entitlement.
COBRA health insurance law allows a terminated employee to purchase health insurance for himself and his family (as long as the family was covered during employment) at the group coverage rate even though the employee is not technically a member of the group any longer. However, the downside is that the COBRA health insurance price can be high as the employee will now need to pay 100% of the monthly, together with an additional surcharge of 2%.
Although COBRA insurance most often comes into play in cases of termination it can also come into effect as a result of a change of employment status such as reduced hours, or divorce from an employee of eligible status. Cover will usually continue for the time specified in the act or for a shorter period if the employee decides to take out individual health insurance cover or joins another group health insurance plan.
As COBRA insurance extends health insurance for terminated employees for a period of 18 months, there is no need to worry about a change in health insurance benefits. Cover under COBRA health insurance remains the same as that provided during employment and the only change is in the responsibility for the payment of monthly premiums. However, it should be noted that it is possible for the benefits under a COBRA plan to change if an employer changes the health insurance plan being offered to current employees during the period of cover.
The most important thing to remember about COBRA health insurance coverage is that it is designed to be a temporary measure and, while it guarantees continued health insurance coverage for a period of up to 18 months, once this period expires you will need to make alternative arrangements.
One danger with COBRA insurance lies in the very fact that it is temporary. For example, if you fall ill while covered by COBRA you could find it difficult, if not impossible, to get future health insurance if this illness is classed as pre-existing or is 'uninsurable' when you come to apply for insurance at a later date.
Capitation: A method of paying for health care services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided.
Employee Retirement Income Security Act (ERISA): A broad-reaching law that establishes the rights of pension plan participants, standards for the investment of pension plan assets, and requirements for the disclosure of plan provisions and funding.
Market segmentation: The process of dividing the total market for a product or service into smaller, more manageable subsets or groups of customers.
Underwriting requirements: Requirements, sometimes relating to group characteristics or financing measures, that MCOs at times impose in order to provide health care coverage to a given group and which are designed to balance a health plan's knowledge of a proposed group with the ability of the group to voluntarily select against the plan (antiselection).
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