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What Is COBRA Health Insurance?
COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. It is a federal law that allows those who have lost or left their jobs to remain on their employer-sponsored health insurance plan for a limited time. Prior to COBRA, health insurance benefits were terminated with employment.
People eligible for COBRA health insurance include employees who have been laid off, terminated, demoted to less hours, or who have resigned. COBRA coverage is available to the employee as well as his or her spouse, dependents and domestic partners (depending on the rules of the state).
The COBRA law requires that employers with at least 20 employees (in the previous year) extend their health insurance coverage to those who have left the company. State and local government agencies must also follow the COBRA requirements.
What Benefits Does COBRA Offer?
COBRA coverage offers the same benefits and options as the health insurance plans offered to current employees—except the employer will no longer be contributing any funds towards your coverage. Those covered under COBRA are required to pay the full amount of their coverage.
How Much Does COBRA Health Insurance Cost Per Month?
As implied above, the monthly cost of your COBRA health coverage will remain the same as it currently is. The only thing that changes is that you won’t receive any kind of help or contribution from your employer.
Are Premiums Tax Deductible?
Many people wonder if COBRA premiums can be tax deductible. The answer to this is that COBRA premiums are just as deductible as any other healthcare premiums.
The IRS allows certain medical and healthcare expenses to be written off, using itemized deductions and the Schedule A form. Each year, there is an allowable amount that can be written off, provided that the expenses were not already reimbursed, and that they meet the criteria. This amount is proportional to your adjusted gross income (AGI). Typically, the IRS recognizes preventative care, treatment, surgeries and dental and vision care as qualifying medical expenses.
Are There Any Alternatives to COBRA?
Of course! Just because you have had a change in your employment, doesn’t necessarily mean that COBRA is the best option for you.
Alternatives to COBRA include: a spouse or partner’s health insurance plan, the health insurance marketplace, your state's health insurance marketplace, Medicaid, or a short term health insurance policy. In many cases, there are even alternatives that exist above and beyond these.
Obviously people’s personal circumstances vary, so the best course of action is always to speak to an expert who can assist you and make recommendations specific to your situation.
Is COBRA The Best Decision For You?
If you’ve been laid off or had a change in your employment, you may be wondering if you should take advantage of your COBRA benefits.
This is the right question to be asking, and it’s imperative that you answer it well. In order to maintain continuity of benefits, you will need to evaluate your situation and other healthcare alternatives, so that you can make some timely decisions.
Our representatives are standing by to assist you, as you evaluate your healthcare options. Contact us today, and we will give you the best recommendations for your situation.
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