COBRA and Cal-COBRA

COBRA (Consolidated Omnibus Budget Reconciliation Act) is designed to provide a safety net for people who might find themselves uninsured after a change in their employment status. For example, a father and husband who works as a construction foreman is laid off from his job.

In the past, the only option for this family would be expensive individual health insurance – assuming they are healthy enough to qualify. However, under COBRA, many companies are obliged to offer ex-employees the right to continue their coverage for a limited time.

There are some important things to keep in mind when considering if COBRA applies to your situation and how it will impact your budget. Not all employees are required to offer continuing coverage under COBRA – those who are not include businesses with fewer than 20 employees. There are also certain other exclusions. However, California residents have the additional protection of Cal-COBRA, which eliminates most of these exclusions, and also offers a time extension for those whose COBRA eligibility has expired.

California healthcare consumers can go to their local library, check with their company’s human resources department or visit online websites to get more information.

Once you have determined if you are eligible for COBRA, you need to consider the cost. Most employers pay for a portion of their employees’ health insurance premium costs as part of their benefits package. However, that contribution will not continue once employment is terminated. If the employee wishes to continue their health insurance benefits, they need to pay the whole amount of the premium out of their own pocket. Using COBRA to continue existing insurance is, however, generally less expensive and easier than purchasing individual coverage.