How Does COBRA Insurance Work?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It is a federal law that allows eligible employees and their dependents to continue their employer-provided health insurance coverage for a limited time after they lose their jobs or experience other qualifying events that would otherwise end their coverage.

Who is Eligible for COBRA Insurance?

To be eligible for COBRA insurance, you must meet certain criteria. You must have been enrolled in a group health plan provided by your employer, and the employer must have at least 20 employees. You must also have experienced a qualifying event that would have otherwise led to the loss of your coverage.

Qualifying events can include:

Additionally, you must have been covered by the employer-provided health plan on the day before the qualifying event occurred.

How Long Does COBRA Insurance Last?

COBRA insurance can last for up to 18 months in most cases. However, certain qualifying events can extend the coverage period to 29 months or 36 months.

The length of coverage depends on the type of qualifying event that led to your eligibility for COBRA insurance.

*May be extended to 36 months if an additional qualifying event occurs.

How Much Does COBRA Insurance Cost?

COBRA insurance can be expensive because you are responsible for paying the full premium, including the portion that was previously paid by your employer.

However, the cost of COBRA insurance cannot be more than 102% of the premium cost for similarly situated individuals who are still covered under the employer-provided health plan.

For example, if the monthly premium for a family under the employer-provided health plan is $1,200, the maximum monthly premium for COBRA insurance would be $1,224.

How Do I Sign Up for COBRA Insurance?

If you are eligible for COBRA insurance, your employer must notify you of your rights under the law. You will then have 60 days to decide whether you want to enroll in COBRA coverage.

If you choose to enroll, you will need to complete the necessary paperwork and pay the first premium within 45 days of your enrollment date.

What Happens When COBRA Insurance Ends?

Once COBRA insurance ends, you will need to find alternative health insurance coverage. This can include purchasing a health insurance plan on the individual market, enrolling in a spouse’s employer-provided health plan, or applying for Medicaid or other government-sponsored health insurance programs.

Frequently Asked Questions

1. Can I still enroll in COBRA insurance if I didn’t enroll when I first became eligible?

Yes, you may be able to enroll in COBRA insurance if you didn’t enroll when you first became eligible, as long as you are still within the time period allowed for enrollment. Your employer must notify you of this option.

2. Can I drop COBRA coverage at any time?

Yes, you can drop COBRA coverage at any time. However, you cannot enroll in it again after you have dropped it.

3. Can I change my coverage level while on COBRA?

Generally, you cannot change your coverage level while on COBRA. However, if your employer makes changes to the health plan, you may be able to make changes to your coverage level as well.

4. Can my COBRA coverage be terminated early?

In some cases, your COBRA coverage may be terminated early. This can happen if you fail to pay your premiums on time, if your employer no longer offers health insurance coverage to its employees, or if you become eligible for Medicare.

5. Can I still use my same doctors and hospitals while on COBRA?

Yes, you can continue to use your same doctors and hospitals while on COBRA, as long as they accept the insurance plan.