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| Job and Health Insurance |
 Because in some states the insurer can impose "minimum participation" requirements, employers may demand employee participation in the company's health plan. For instance, the insurer may stipulate that 85 percent of the company's employees must belong to the health plan in order for the insurer to cover the group. This is to make certain that the plan participants represent a mix of healthy and unhealthy employees.
If only the "sick" employees who needed to benefit from the covered benefits joined the plan, the high number of resulting claims would cause the cost of the plan to soar and threaten it with financial collapse, a phenomenon known as "adverse selection."
Question
What would happen to my health insurance when I was laid off from my job? How does COBRA work?
Answer
Most likely you will be able to temporarily continue your health insurance benefits.
COBRA is the federal law (sometimes called "continuation coverage") protects the health care rights of workers, who are laid off, as well as spouses and dependents of those workers, in certain situations. It empowers you to keep your benefits for 18 months, and sometimes up to 36 months, depending on the circumstances.
The law is pretty generous, but there are several conditions that must be met for you to be eligible for COBRA coverage. For example, your company is required to provide COBRA only if it has at least 20 employees total (full-time and part-time) and continues to offer a health plan to its existing employees. If you were dismissed for "gross misconduct" on the job, you won't be eligible.
What's the catch with COBRA?
You will have to pay the full monthly premiums that your employer previously paid, plus a slight administrative fee (up to 2 percent). Premiums could easily top $600 a month, for a single person, and $1,200 or more for a family.
While those payments are too high for you, the alternative is trying to find an individual health plan until — or if — you can get into another group plan. A family or an individual plan may be more expensive than COBRA for the same benefits. These plans are medically underwritten. A lot of insurance companies will decline to offer coverage to applicants with a serious illness and will also exclude pre-existing conditions from coverage. That is why COBRA is an especially good option for someone with an existing illness.
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