If you are considering leaving your job or if you’ve recently lost your job and are concerned about your health insurance, don’t be! Your employer is most likely required to continue your coverage, thanks to COBRA.
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1986. COBRA continues group health coverage that would otherwise end. It means that if you lose your job, enter retirement, get divorced, or lose dependent children status, you can temporarily continue your health coverage with your group rate.
COBRA is not the only option if you lose your group health insurance. Qualifying events like losing a job also determine eligibility for a Special Enrollment Period during which you can purchase another plan within the Marketplace – but the main benefit of COBRA coverage is that you’ll receive the same coverage that you had before your qualifying event.
Who Qualifies For COBRA?
Any employer with at least 20 employees is required to offer COBRA coverage (and inform employees of this option). That coverage will apply for plans held by private employers and plans sponsored by state and local governments. You are eligible for COBRA if you lose your job, enter retirement, get divorced, no longer have dependent children, or other factors that would change a group health plan classification. Additionally, children and spouses of COBRA qualified beneficiaries will be covered.
Qualifying events include:
- Either voluntary or involuntary termination of employment (unless the reason is gross misconduct)
- Reduction in working hours
- New Medicare qualification
- Divorce or legal separation
- Death of the covered employee
- Loss of dependent child classification (according to the plan)
The Cost Of COBRA
If you lose your job and enter COBRA coverage, you may have to pay more because your employer will not be helping you with the costs. However, it is still typically going to cost less than individual health coverage.
For most people, COBRA coverage will cost about the same that your previous coverage did. Some beneficiaries will qualify for an 11-month disability extension which may cost 150% of the typical coverage cost. COBRA plans allow beneficiaries to pay on a monthly, weekly, or quarterly basis but the initial payment must be made within 45 days of the start of COBRA coverage. Care will be covered from the date of the COBRA qualifying event.
Employers can find a comprehensive COBRA guide here.