What is COBRA Health Insurance?

Healthcare Writer

Updated on February 29th, 2024

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One of the biggest worries when leaving your job might be losing your health insurance. That’s where COBRA steps in, offering a safety net to keep your coverage going. 

COBRA, short for The Consolidated Omnibus Budget Reconciliation Act, is designed for employees, their spouses, and dependent children who’ve lost their employer-sponsored health benefits. It applies to companies with 20 or more employees, offering the same health coverage for up to 18 months, and sometimes even longer.

 Here’s what you need to know:

  • Eligibility: If you’re leaving your job or facing a reduction in hours, COBRA health insurance could be for you. Other qualifying events include divorce, legal separation, or a dependent child losing their status.
  • Signing Up: Your employer should send you a COBRA election notice with all the details within 14 days of your qualifying event.
    •  Haven’t heard anything? Contact your former employer’s benefits department to get the ball rolling.

Now, let’s talk costs because COBRA isn’t cheap. You’ll be paying the entire premium, including what your employer used to cover, which could mean a significant increase in your healthcare expenses. However, it’s crucial to stay informed about the deadlines and payment details to maintain your coverage without interruption. Here’s the breakdown:

  • Costs: Expect to pay up to 102% of the plan’s cost, including a small administrative fee.
    • In some cases, your employer might help with these costs, especially during transitions like mergers or furloughs.
  • Deadlines: You have 60 days to opt into COBRA after receiving your notice, and then 45 days to make your first premium payment.
    • Missing these deadlines could mean losing your coverage.

For more detailed information or assistance, reaching out to your employee benefits department or the U.S. Department of Labor’s Employee Benefits Security Administration is a good starting point.

Switching from COBRA to Marketplace Plans

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  • Already on COBRA?
    •  You can switch to an ACA Marketplace plan during Open Enrollment or qualify for a Special Enrollment Period if COBRA is expiring, you opt to end COBRA early, or your COBRA costs increase due to loss of employer contributions or government subsidies.
  • If you lose employer-based insurance,
    •  You can choose between COBRA coverage and enrolling in an ACA Marketplace plan, with the latter option available during a 60-day Special Enrollment Period.

FAQ

What is COBRA Insurance?

COBRA Insurance provides former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to specific qualifying events such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.

What are COBRA Insurance Costs?

COBRA insurance costs can be high because the individual pays the full premium for healthcare coverage, including the share previously covered by the employer, plus a 2% administrative fee. The cost varies based on the health plan’s premium cost prior to leaving the job, reflecting the total cost of the plan, not just the employee’s previous contribution.

How Does COBRA Insurance Work?

COBRA insurance allows individuals to keep their employer’s group health insurance for a limited time after losing their job or experiencing a reduction in work hours. To activate COBRA coverage, one must elect COBRA within 60 days following the loss of coverage or the receipt of the COBRA notification, whichever is later, and pay the full premium amount retroactively.

How Long Does COBRA Insurance Last?

COBRA insurance typically lasts for 18 months but can extend up to 36 months under certain circumstances, such as a second qualifying event, disability, or for certain dependents. The duration of coverage depends on the nature of the qualifying event that triggered the COBRA eligibility.

How Do You Get COBRA Health Insurance?

To get COBRA health insurance, you must be eligible through a qualifying event such as job loss or reduction in hours. Employers must notify the plan administrator within 30 days of the event, who then sends a COBRA election notice to the individual. You have 60 days from receiving the notice or the date coverage ended, whichever is later, to elect COBRA coverage.

How to Get COBRA Insurance?

After experiencing a qualifying event, you will receive a COBRA election notice. To elect COBRA insurance, follow the instructions provided in the notice, complete the election form, and submit it to the plan administrator within the 60-day election period. You must also pay the initial premium for coverage to commence.

How Does COBRA Insurance Work If I Quit My Job?

If you quit your job, you’re eligible for COBRA insurance if your employer offers a group health plan and you were enrolled in it. You have 60 days from the date your health coverage ends or from the date you receive the COBRA election notice, whichever is later, to elect COBRA coverage by paying the full premium.

How Much Is COBRA Insurance for a Single Person?

The cost of COBRA insurance for a single person depends on the full premium of the health plan previously contributed to by both the employer and the employee, plus a 2% administrative fee. This amount varies significantly based on the employer’s health plan costs and the coverage level selected.

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How to Cancel COBRA Insurance?

To cancel COBRA insurance, you need to contact the plan administrator or the insurance provider directly and follow their specific procedures for cancellation. Typically, you can cancel at any time, but it’s important to confirm the process and any deadlines or requirements with your plan administrator.

Is COBRA Insurance Expensive?

Yes, COBRA insurance is often considered expensive because individuals must pay the full premium cost that was previously shared with the employer, plus a 2% administrative fee. This can make COBRA premiums significantly higher than what employees are accustomed to paying while employed.

Which employers qualify to offer COBRA? 

Employers that qualify to offer COBRA health insurance have had at least 20 employees on more than 50% of their typical business days in the previous calendar year.

Article Sources

  1. U.S. Department of Labor. Continuation of Health Coverage (COBRA). Retrieved from http://www.dol.gov/general/topic/health-plans/cobra. Accessed February 6, 2024.
  2. U.S. Department of Labor. COBRA Continuation Coverage. Retrieved from http://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra. Accessed February 6, 2024.
  3. Healthcare.gov. COBRA coverage and the Marketplace. Retrieved from https://www.healthcare.gov/unemployed/cobra-coverage/. Accessed February 6, 2024.
  4. Blumberg, D. L. What is COBRA? COBRA HealthCare. Retrieved from https://cobrahealthcare.com/what-is-cobra-18791. Accessed February 6, 2024.
  5. Konrad, W. What Is COBRA? HealthCareInsider.com. Retrieved from https://healthcareinsider.com/cobra-health-insurance-193992. Accessed February 6, 2024.



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