The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health insurance program that allows eligible employees and their dependents to continue receiving health insurance coverage when they lose their job or experience a reduction of work hours. Below, we'll explore the basic details of COBRA, how it works, its eligibility criteria, pros and cons, and other features.
How do you qualify for COBRA health insurance?
COBRA health coverage applies in the following situations:
As an employee:
- You were employed and covered under an employer's group health plan
- You were laid off, fired, retired, quit or had your work hours cut to where you’re no longer covered under the employer’s group health plan
As a dependent:
- Dependents of someone who qualifies for COBRA based on the above criteria
- Divorced spouses or those filing for legal separation from an employee
- Spouses of a deceased employee
If you are unsure whether you meet COBRA eligibility requirements, you can contact your employer’s Human Resources department. You can also contact the insurance carrier for the health plan.
How does COBRA insurance work?
COBRA insurance extends your health insurance coverage when an employer's plan ends:
- Your employer, your insurance carrier, or both will provide information on COBRA coverage. Your insurance carrier is required to include COBRA rights information in your plan documents when you initially enroll.
- You will have up to 60 days to decide whether you want to continue your health coverage under COBRA. If you don't elect it, your health coverage will end on the day that your employer's plan coverage ends.
- If you elect to continue coverage under COBRA, it will start the day after your employer's plan coverage ends. It will offer the same benefits you had under your employer's group plan.
- COBRA coverage may last for 18 or 36 months, depending on the type of qualifying event that made you eligible for COBRA.
- COBRA may be terminated early if you don't pay your premiums or other fees for coverage. It may also be terminated if you get a job that offers health insurance coverage before it runs out.
To get the most out of your COBRA insurance make sure you read the details of your plan. If you have questions, contact your insurance carrier.
What does COBRA cover?
COBRA insurance covers the same benefits your employer’s health plan covered.
COBRA does not cover supplemental coverage, such as disability, life insurance, hospital care insurance, or other types of voluntary coverage.
Is COBRA coverage expensive?
COBRA can be significantly more expensive than what you paid under your employer’s plan. Under COBRA you pay 100% of the costs for the health plan. This includes any costs your employer previously helped pay. This extra cost can make this coverage more expensive for you, even though it’s the same health plan.
Is COBRA insurance right for you?
- It provides you with the same coverage provided under your previous employer
- Coverage under COBRA means you can continue to see the same providers and receive the same health plan benefits
- COBRA may cost you more out-of-pocket
- It is only available for a limited time
It may be helpful to compare options, such as individual health insurance plans.
COBRA versus individual health insurance—which is better?
Purchasing an individual health plan is an alternative to COBRA. An individual health plan is one you buy from a broker or insurance carrier or through a state or federal Health Insurance Marketplace. Under the Affordable Care Act (ACA), loss of a job and related health coverage qualifies you for special enrollment. This means you can shop for and purchase an individual health plan outside of the open enrollment window. You can shop, compare plan details, costs, and more to see if this is a better alternative than COBRA insurance. Visit HealthCare.gov to search for an individual health plan.