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COBRA Alternatives May be Necessary if COBRA Eligibility is in Question

There are certain eligibility requirements that must be met in order for a person to qualify for COBRA benefits. The Consolidated Omnibus Budget Reconciliation Act was enacted by Congress to protect people from losing health insurance due to the loss of a job, the death of a sponsoring family member, a divorce, the death of the sponsoring family member, and other life altering events that are deemed eligible.

Usually, if a person leaves a job, they have the right to purchase health insurance on the group plan sponsored by their employer for up to 18 months, due to the provisions of the law under COBRA. The employer is required to notify the former employee of the cost of their insurance premium in writing. Employers also give a verbal explanation at the exit interview.

There are some cases where people find out that they are not eligible to receive extended health benefits under COBRA provisions. The people affected are unpleasantly surprised when they discover their status, if ineligible. If a person discovers he or she cannot receive benefits under COBRA, there are other options that are available and they must act quickly because time is of the essence. Most insurance companies will not cover pre-existing conditions if there is a break in coverage of more than 60 days, so it is important that if a person is recently separated from their job that they contact a health insurance agent so they can understand all of their options.

Here are a few of the situations that cause people to be ineligible for benefits under COBRA:

· The law only requires companies with over 20 employees to provide benefits under the laws governed by COBRA. Employees who work for companies that have fewer than 20 employees are not eligible for benefits under COBRA. If they leave their job or are terminated, they lose benefits at the end of the specified coverage period. In most cases, coverage ends at the end of the month the employee is terminated. People who fall into this category need to contact a private health insurance agent as soon as possible to purchase an individual policy.

· Many companies in this economic crisis are doing everything they can to eliminate expenses. Health insurance coverage for employees is a big expense for businesses. Employees should be aware that their company could cut health insurance benefits or eliminate them altogether. If that happens, the employee is not eligible for benefits under COBRA.

· Sometimes, people who are paying for continued health insurance benefits lose their eligibility when they miss a payment. The law states that if people fail to pay for their coverage at any time, they can lose their eligibility status. Although COBRA requires the insurance company to send out a cancellation notice when a person misses a payment, people do not always see the warning letter. That is why it is imperative for people to watch for any notices from their insurance company.