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COBRA Health Insurance

Health Insurance

How COBRA Works

Davis was terminated from his employment because of long absence from work and not because he voluntarily resigned or any gross negligence on his part. Therefore, he and his family are eligible for health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) provided his company maintains its group health plan and still has 20 or more employees for which they currently have 100. If his former employer were to have fewer than 20 employees, then he might still be eligible for what is called mini-COBRA. The COBRA Act was put into law in 1986 in order to provide continuation of group health coverage for workers who have lost their jobs. The Act allows for the unemployed individual to avoid any gaps in coverage that would prevent them from having pre-existing conditions excluded once they were able to obtain group health insurance again, which is also addressed under the Health Insurance Portability and Accountability Act (HIPAA) of 1996 (Calder, 2005, p. 56-57). This would be extremely important to Mr. Davis being he suffers from sickle cell anemia and requires frequent medical care.

The premiums; however, for COBRA coverage can be quite expensive for those who are accustomed to paying a portion of their premium with their employer paying the remainder. However, this coverage may be less expensive than Mr. Davis obtaining private health insurance in light of his chronic condition, which would allow the insurer to impose a higher rate to cover him. The former employee under COBRA will be responsible for 102% of the cost to retain group plan health insurance. The extra 2% is charged to cover administrative costs while under this coverage. If Mr. Davis has not obtained new group health insurance within the 18 months allowed under COBRA and is considered disabled by the Social Security Administration, he may be eligible for an extension, however he could possibly be required to now pay up to a 150% premium (U.S. Department of Labor, 2012).

Challenges Facing the State or Local Government

It has been estimated that 46 million Americans were uninsured in during 2006-2007 (Gulley, 2011 p. 368). Chronically ill adults often require expensive health care services, which put a drain on available resources available to provide health care to uninsured, low-income individuals. When these adults forego the care they need, they become sicker and will then require increased health services, which will incur additional expense. These expenses need to be covered somehow and under the law; hospitals cannot refuse to provide treatment to individuals who are in need of emergent care to save the life of or to stabilize a critically ill patient. State governments are required to fund programs such as Medicaid, which provides coverage for low-income persons who cannot afford to pay for health care. Individuals with chronic health issues that require extensive medical care cause a drain on that system. Studies have also shown that patients on Medicaid often are underinsured and receive a poorer quality of care, which has raised mortality rates among those individuals (McWilliams, p. 479).