It's been 17 fast months since my transition from employed lackey to
proud self-employed business owner.
 However, I do miss having health coverage, even health coverage I
paid $350 a month for.
 My question is - why, when COBRA was created, was it limited to 18
months? Why won't my ex-employer extend it out, since I'm (apparently)
paying the entire cost of my own premiums?  If I'm paying the premiums
myself, then what is the cost to them?

pcventures --

COBRA (which stands for the Consolidated Omnibus Budget Reconciliation
Act of 1985) does indeed impose costs on employers that would
otherwise be borne by insurance companies, the government and
individuals.  The judgment (i.e., political compromise) by Congress in
1985 was that the appropriate maximum period for shifting these costs
to employers was 18 months (in most cases).


First, while the employer does not contribute to premiums under COBRA,
it does assume the costs associated with COBRA health coverage
administration -- salaries, overhead, and so on.   These are costs
that would ordinarily be borne by an insurance company offering
individual coverage.

"Isn?t COBRA an insurance company law? No. When properly elected, an
insurance company must extend coverage, but administering COBRA is up
to the employer."
Consolidated Administrators, Inc.: Frequently Asked COBRA Questions
http://www.c-admin.net/Resource_Center/COBRA___State_Continuation/More_COBRA_Information/Frequently_asked_COBRA_Questio/frequently_asked_cobra_questio.html##13

See also:
Travis Software Corp.: About Cobra
http://cobrahelp.com/main_content/about_cobra.asp



Second, while those covered by COBRA must pay 102 percent of the
premium for equivalent coverage for active employees under the
employer's group policy, the average COBRA participant generates
claims that are about 50-55 percent higher than those of the average
active employee.  This skewing of the risk pool means that the premium
costs of both the employer and active employees are higher than they
would be but for COBRA.

"Employers' costs for individuals electing COBRA average 150% of COBRA premiums."
Washington Business Health Update
http://216.239.37.104/search?q=cache:V4riKhsXUxUJ:www.wbgh.com/word/121101.doc+cobra+extension+legislation+cost&hl=en&ie=UTF-8

See also:
Travis Software Corp.: About Cobra
http://cobrahelp.com/main_content/about_cobra.asp



Finally, it follows that without COBRA coverage, a substantial number
of otherwise qualified individuals would not, or could not, obtain
individual coverage and thus could be an added burden on for federal
or state government entitlement programs (e.g., Medicaid).  This, of
course, would be a cost ultimately borne by all taxpayers.
See, for example,
U.S. Department Of Labor: Fact Sheet: Job Loss
http://www.dol.gov/ebsa/newsroom/fsjobloss.html



Additional Sites:

Here is a link to the page on the AARP's Web site that discusses COBRA
from the point of view of the policyholder.  It also provides links to
other COBRA online resources:
AARP: COBRA: Keeping Your Group Health Insurance
http://www.aarp.org/Articles/a2003-05-02-cobra.html

Here is a link that contains more corroboration of the notion that
COBRA participants general more claims that active employees,  In this
case, the estimate is 55 percent higher:
Berg Andonian: Understanding COBRA (scroll to "Interesting COBRA Facts"0
http://www.bergandonian.com/Understanding_COBRA.PDF


Search Strategy:

COBRA is a big subject.  I used a variety of Google searches aimed at
zeroing in on the answer to your specific question among the sea of
sites that relate to COBRA in more general terms or in ways not
relevant to your question.  Probably the most useful one among many
was this one:

cobra legislation 1985 "18 months"
://www.google.com/search?num=100&hl=en&lr=&ie=ISO-8859-1&q=cobra+legislation+1985+%2218+months%22



I am confident that the above information is what you are seeking.  If
anything is unlcear, please ask for clarification before rating this
answer.


markj-ga

---

Request for Answer Clarification by pcventures-ga on 08 Dec 2003 12:26 PST

Interesting info, but what I suppose I was looking to do is find any
mechanism I could to extend my coverage further.
 Could you do a quick check again to see if anything indicated this may be possible?

---

Clarification of Answer by markj-ga on 08 Dec 2003 14:42 PST

pcventures --

Thanks for the clarification.  I really thought I had fully answered
your question by documenting the costs that employers must incur to
offer their group policies to people who are no longer active
employees.  But let me offer some more information that should meet
your clarified interest in whether there is a "mechanism" for getting
your employer to extend your COBRA coverage.

Let's start with the premise that, with the possible exception of
providing retiree coverage, employers have little incentive to incur
health insurance or other costs for the benefit of former employees.

Enter COBRA, which reflects a public policy decision by Congress to
*make* employers do so under defined circumstances.   All but the
smallest private employers are required to provide at least 18 months
of participation in their group health plans to former employees who
have experienced a particular "qualifying event."  This "qualifying
event" is "the termination (other than by reason of such employee's
gross misconduct), or reduction of hours, of the covered employee's
employment."  This termination of employment may be voluntary or
involuntary.
29 USC 1163
http://www4.law.cornell.edu/uscode/29/1163.html


The only ways that your coverage could be "extended further" are:

1. Your home state might have its own law extending COBRA-like rights
for an additional period.  In order to explore this possibility, you
should contact your state insurance department to see if you qualify;

2.  You have become disabled during the 18-month period.  Under some
circumstances (the analysis of which will require legal advice), you
could get COBRA rights extended for another 11 months;

3.  Your dependents could get COBRA overage extended for up to 36
months because of other "qualifying events," such as your death, your
divorce or your enrollment in Medicare.

This summary can be found in the form of a handy chart at the AARP Web
page linked in my answer.  Here it is again:
AARP: COBRA: Keeping Your Group Health Insurance
http://www.aarp.org/Articles/a2003-05-02-cobra.html


In sum, your employer has no incentive to extend your COBRA benefit
beyond the legal minimum that I have described.  Indeed, your employer
would be hard-pressed to treat you differently than other similarly
situated employees.

Finally, if you want to peruse the federal COBRA statute further, here
is a link to the first section of  the U.S. Code relating to
"continuation coverage" under COBRA, from which you can link directly
to succeeding sections:
29 USC 1162
http://www4.law.cornell.edu/uscode/29/1162.html

I hope that this clarification meets your expectations.  I should
emphasize that the information in this clarification is not intended
to be legal advice and you should not treat it as such.

Once again, if anything is unclear, please ask for clarification
before rating the answer.


markj-ga

Great answer - thank you so much for going the extra mile and getting
to the part that I was *most* interested in.
  To clarify, what I meant in my original "clarification" was that I
had neglected to mention that part in my initial questions.
  I was simply shoring up a question that I should have made better in
the first place.
 Your answer was excellent both times around.
 Thank You!

pcventures --

Thanks much for the rating, the kind words and the tip.  

markj-ga