Q&A with iCan Legal Counsel: Matt Leeth, Esq.

Q: If I leave my job for another, am I eligible for Cobra? Secondly, will Cobra even exist anymore with the new Healthcare law?

Andrea O. - King of Prussia, PA

A: If your former employer had 20 or more employees, and you were covered under your former employer’s group health plan, chances are you’re eligible for continuing coverage under COBRA. COBRA did not go away under Obamacare. And for some, it remains the best option to maintain coverage between jobs, or after becoming unemployed.

COBRA requires that your former employers plan be offered to you following separation and generally plan coverage can continue up to 18 months. COBRA coverage is often thought of as too expensive for many, as the generous benefits under many employer plans come at a steep premium cost, and you will almost always be required to pay 100% – sometimes even up to 102% - of the premium cost. For example: Let’s say your employer offers you employer-sponsored health insurance and it pays 80% of the premium on your behalf. You elected coverage, and you contribute $100 a month (20% of the premium) while an employee. After qualifying for COBRA, you’d be expected to pay the full premium - $500 a month! That’s just an example – your situation may be better or worse – but before Obamacare, it was already a tough choice to decide whether taking coverage under COBRA was appropriate.

There’s an important new dynamic to consider under Obamacare, however: its new subsidy-eligible plans. Separation of employment is what’s called a "qualifying life event" under the law, which allows you to purchase a subsidy-eligible individual plan for you and your family even if outside the normal open enrollment period. You can purchase these plans through the government exchanges, or through the licensed insurance agents at iCan, at no additional charge. For those households making under 400% of the federal poverty level (FPL), this may be a viable option for short-term coverage between jobs, or even long-term if need be. For households not eligible for subsidies, this may not be such a great option, as premiums could be more expensive than with COBRA - with worse coverage.

It’s important to note: subsidy eligibility is determined based on your household’s income over the entire year, not at the present time. If you are the only income in your household, and if you lose your job mid-year, but have already earned 400% of the FPL that year, you should be very careful receiving subsidies for health insurance because come tax time, you’ll be paying the IRS back!

This, like so many issues in healthcare reform and insurance, is tricky and requires personal attention. The licensed health insurance agents at iCan are healthcare reform specialists and can help answer your specific questions about what’s best for you and your situation. Give them a call today!

Matt Leeth is an attorney for the iCan Benefit Group, and is licensed to practice in the State of Florida. The information or opinions contained herein are for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel.