Health insurance is a vital benefit but with record high unemployment numbers, millions of Americans are at risk of losing coverage or already have. COBRA coverage can be a lifeline to employees who are now facing unemployment as it gives them the option to continue with their existing health plan. But these plans can be expensive as employers are no longer contributing to the premium, leaving the individual responsible for the full premium, plus an additional 2% administration charge.
The Department of Labor has offered some relief in response to the COVID-19 pandemic by extending the election period for COBRA coverage. Pre-pandemic, you had 60 days to elect COBRA coverage once you had a qualifying event. The 60 days remains the same, but under the new rule, the clock does not start until the end of the Outbreak Period, which ends 60 days after the National Emergency ends. So, you effectively have 120 days after the National Emergency ends to opt in.
This extends the window for eligible individuals who have not already opted out of COBRA coverage to still get coverage. However, retroactive premiums will be due. Under the prior rules, premiums would be due 45 days after election, with a 30-day grace period. The new rule extends these deadlines beyond the Outbreak Period.
If you find yourself in the position of no longer having employer coverage, it is important to review your options. While COBRA coverage provides consistency with a plan that you are already familiar with, it can be an expensive choice. Review options to switch to a spouse’s employer-based plan if available. There is also the Affordable Care Act (ACA) marketplace to consider. When weighing your options, compare the benefit coverage, cost, deductibles and factor in if you have already met the deductible for your employer plan. Also, consider if switching plans will affect which doctors are in your network. Though you have extended time to elect COBRA, you only have 60 days from separation to sign up for ACA or 30 days to switch to your spouse’s employer-based plan, otherwise you will have to wait until open enrollment.