Misconceptions about COBRA Insurance & Involuntary Termination Provisions
The reader should be reminded that COBRA is an enactment that allows 18 months of continued health coverage in the case of “qualifying events" that cause the separation or termination of an employee from the provider of his health coverage under a group insurance plan.
Others misconstrue COBRA as the insurance program itself, while some others have the notion that COBRA insurance and involuntary termination conditions will qualify an employee for a continuation of his insurance coverage at reduced premium costs.
As a result, many employees laid-off from work due to the recent economic recession felt that the COBRA insurance program they were counting on was a total let-down.
Perhaps as a way of appeasing the public’s disappointment, the 2009 American Recovery Act (ARRA) included COBRA premium reduction assistance for qualified employees laid-off from work at the height of the economic recession. This assistance, though, was effective only through May 2010, and those who availed of this premium reduction assistance were able to continue their qualifying COBRA health insurance coverage up to 15 months after being terminated from work.
This was still a disappointment for many, since the employee could claim his 65% reimbursement for insurance costs by way of a tax credit, instead of an actual reduced cost. Simply put, the displaced worker still had to dig deep into his pocket to afford and actually purchase a qualifying COBRA insurance benefit. Not only that, this only added to the misconceptions about COBRA and involuntary termination provisions, since many employees are still seeking reduced premium assistance.
Nonetheless, there is a veritable guide for seeking health care coverage as alternative to COBRA that readers could use as a reference. You can find this in a separate article entitled: When You Can’t Count on COBRA.