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COBRA: Not just a venomous snake

If you’re considering engaging a professional resume writing service, you’ve probably already had a job change, or expect to have one soon. This guide will help you consider the implications of one of the biggest questions anyone makes when changing jobs: What happens to my health insurance?

This information is offered as a general guide. What follows is not legal advice. Use this guide to ask questions of a qualified benefits professional.

In my last post, I explored some of the questions you’ll want to ask when you’re leaving one employer’s health insurance coverage and enrolling in another employer’s plan. 

But what if your employment is ending, and you aren’t starting work right away, or you’re going to be a “solopreneur,” or you’re joining an employer that doesn’t offer health insurance? You have a somewhat complicated decision to make.

First, confirm with your old employer: When does your coverage end? Plans vary. It might go through the last day of the month, or it could stop on your last day of work. Or, it might end on the last day of your final pay period. It’s important to know this date when you’re choosing what to do next.

Now that you know when your old coverage ends, you need to decide where, when and how to enroll for your next health insurance plan. Your choices may include:

  • Stay enrolled in your old employer-sponsored plan through COBRA (which is simply the acronym for the law that requires certain employers to offer continuation coverage)
  • If your employer’s group had fewer than 20 employees, they don’t have to offer COBRA, but many states require a COBRA-like continuation option for small groups
  • Your spouse or domestic partner may be able to add you to their policy
  • Are you younger than 26? Your parent may be able to add you back onto their policy as a dependent
  • Buy an individual insurance policy through the Health Insurance Marketplace
  • If you’re going back to school, your university may offer coverage
  • Are you 65 or older? You’re eligible for Medicare
  • There may even be other options, depending on your situation

Unless you committed some act of seriously egregious misconduct – and let’s assume you didn’t – you’ll have the option to continue your health coverage under your most recent employer’s plan, most likely via COBRA. But there’s good news and bad news.

Good news: 

  • Your deductible and other benefit accumulators likely continue – they don’t reset. Unless your COBRA enrollment coincides with the first day of the new plan year.
    • If you’re in the middle of treatment for something, this may make a big difference to you. If you are healthy and never use insurance, it matters a whole lot less.
  • You and your dependents now have independent election rights, so you can continue insurance for, say, only one family member who really needs it.
  • You have 60 days to decide and enroll, and 45 more days to pay for coverage. This buys you time to research and secure other coverage options.
  • Even if you wait till day 59, if you have an emergency and need to enroll, you can, retroactive to the day after your coverage ended.

Bad news:

  • If you (or your dependents) weren’t enrolled in your employer’s insurance on your last day of work, you don’t have the option to enroll in it through COBRA.
  • Your employer can (and probably will) charge you the full premium, and tack on 2% as a “service fee.” In other words, it’s pricey.
  • Most employers won’t prorate a month, so if you want coverage for, say, the part of the month before your new insurance starts, you have to pay for the full month.
  • If you decline to enroll, and need coverage after your 60 day election window passes, you’re out of luck – you cannot go back and elect continuation after that point. Your deadlines should be in the letter you receive.

Your employer is obligated to send you a letter that describes your COBRA rights and responsibilities, and they need to do it timely (usually within a week or two). Many employers outsource the COBRA process to a third party administrator (TPA). So, before you leave, confirm that your employer has your correct mailing address, and ask whether you should be watching your mailbox for a letter from them, or the name of the COBRA vendor, so you don’t overlook it. If you don’t get your letter within two weeks, contact your previous employer.

(Be aware that the COBRA enrollment process is still transacted mainly through postal mail. But, if your employer uses a TPA, you’ll probably be able to pay your premiums through their website.)

For more information about COBRA, go to the source: The US Department of Labor shared this publication. Also check your state’s COBRA extension laws: This website has information about state continuation for smaller employers.

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