South Carolina Life and Health Practice Exam

The election of COBRA for continuation of health coverage will what?

1. Decrease coverage and lower premium

2. Maintain the same coverage and increase premium

3. Terminate coverage immediately

4. Convert to a different policy type

The correct answer is: Maintain the same coverage and increase premium

When an individual elects COBRA (Consolidated Omnibus Budget Reconciliation Act) for the continuation of health coverage, they are opting to maintain the same level of coverage they had while employed. COBRA allows eligible employees and their dependents to retain their group health insurance benefits for a limited period after experiencing a qualifying event, such as job loss or reduction in work hours. While the coverage remains the same, one significant aspect of COBRA is the cost of premiums. Under COBRA, the individual must pay the full premium for the coverage, which often includes the portion that was previously covered by the employer as well as a small administrative fee. This is typically more expensive than what the individual paid while employed because it no longer includes the employer's contribution. Therefore, while the coverage itself is maintained, the premium costs for the individual usually increase as they assume full responsibility for the payment. This understanding clarifies why maintaining the same coverage typically comes with an increase in premium costs under COBRA.