Home » Cobra Insurance Frequently Asked Questions
COBRA Insurance FAQ's
Answers to commonly asked questions about COBRA
Although COBRA insurance is a great option to maintain health insurance coverage, for many it is a confusing and complex issue that raises many questions. Finding answers to these questions is incredibly important to make sure you make the right decisions for you and your family.
Use our list of the most commonly asked questions about COBRA insurance to help find the answers to many questions that will likely surface as you consider COBRA insurance as well as the many alternatives. Please contact us with any additional questions.
COBRA insurance actually stands for the Consolidated Omnibus Budget Reconciliation Act health benefit that was passed in 1986 to provide continuation of group health coverage insurance after an employee may otherwise have lost health insurance benefits at the end of employment. COBRA insurance is provided to former employees, retirees, spouses, former spouses, and dependent children after specific types of employment loss and is meant to provide interim health insurance coverage so that aforementioned persons do not immediately lose all health insurance coverage.
Under the COBRA health benefit act the former employee, retiree, spouse, former spouse, and dependent children may be eligible for continued health insurance benefits if they meet certain requirements laid out in the legislation. Specifically, to qualify for COBRA insurance, you must meet three requirements.
- Type of Insurance Plan Coverage: In order to be eligible for COBRA insurance, your group health insurance plan must cover 20 or more employees for more than 50% of its typical business days. Both part time and full time employees count towards qualification of a plan under COBRA insurance. The easiest way to know if your current plan qualifies is to ask your employer.
- Qualified Beneficiaries: Under COBRA insurance, anyone who was covered under the employer's plan will continue to receive coverage in almost all cases. This could include the covered employee, spouse, and dependent children. For a retiree, this would include the retiree, retiree's spouse, or retiree's dependent children. In some cases agents, independent contractors, and directors who participated in the health insurance plan of a partner company may also qualify for COBRA insurance.
Type of Qualifying Events: In order to qualify for COBRA insurance, you must have qualifying event that entitles you to COBRA insurance coverage. It is important to know that qualifying events include both voluntary and involuntary job less, as well as reduction in hours. Qualifying events also differ for each beneficiary.
- Voluntary or involuntary termination of employment for any reason other than "gross misconduct"
- Reduction in the number of hours of employment
- Voluntary or involuntary termination of the covered employee's employment for any reason other than "gross misconduct"
- Reduction in the hours worked by the covered employee
- Covered employee's becoming entitled to Medicare
- Divorce or legal separation of the covered employee
- Death of the covered employee
- Loss of "dependent child" status under the plan's rules
- All qualified events listed under spouses
- Covered Employee
As long as you or the employed party whose insurance plan you participated in was enrolled in a group health insurance plan during their employment that is still active for current employees and you meet the above criteria you are eligible for COBRA health insurance benefits.
Most group health insurance plans that cover more than 20 employees are covered by COBRA health insurance benefits. Generally this are privately provided insurance plans (i.e. CIGNA, Blue Cross, Kaiser) and cover virtually all sectors of employment.
Generally employers must notify the group health insurance provider within 30 days of the qualifying event that causes loss of health insurance for the employee. If you are a qualified beneficiary (i.e. spouse, dependent child, former spouse, etc.) you must notify the group insurance health provider within 60 days that your insurance has been lost. Once the initial notification happens, the group health insurance provider has 14 days to send an election notice to the affected parties which provides them with the details and option for signing up for COBRA insurance benefits. From there, you have 60 days to decide if you would like to sign up for COBRA.
Once you decide you would like to participate in COBRA health insurance benefits, you have 45 days to pay the initial premium.
You have 60 days to determine if you would like to sign up, or "elect", COBRA insurance. The start date is determined by date you receive the election notice from the group insurance plan. This notice must be delivered in person or by first class mail. In many cases, this election form will be provided to the employee at the time of job loss, however this is not always the case. Qualified employees and spouses may elect coverage for their dependent children.
COBRA health insurance benefits begin the day that the coverage would have been terminated due to the qualifying event. This means that even if your election date extends past the end of coverage, you will be retroactively covered once the COBRA election form is approved by the group insurance provider.
Every health plan differs slightly in how you file your claim for COBRA health insurance benefits however every health insurance provider is required to explain how to file COBRA claims in the Summary Plan Description. However, all qualified employees should receive an election form for COBRA insurance from the health insurance provider within 60 days of receiving the loss of care notice from the employer.
You COBRA claim could be denied for various reasons, most often related to failing to meet one of the requirements for being eligible for COBRA insurance benefits. If your claim is denied, you have the opportunity to appeal the decision within 60 days of notification of a denied claim. The health care provider must then notify you within 60 days if the appeal was overturned.
Under normal circumstances, only an individual who lost their health coverage due to becoming disabled may file for an extension. Their coverage can be extended 11 months in most situations, however it is likely that the premium for COBRA insurance may increase during this extended coverage. In order to file to extend your COBRA insurance benefits due to disability, you must obtain a letter from the Social Security Administration that you became disabled within 60 days of the start of your COBRA insurance coverage and submit it to your health insurance provider.
COBRA insurance costs are based on the insurance premium cost under the group insurance plan you participated in as an employee. Depending on your employer, they may have paid the entire premium or part of the premium. Under COBRA insurance benefits, you will be responsible for paying the entire premium with an additional 2% in administration costs. Although this may seem high, it is still significantly less than you would pay for similar heath insurance coverage if you bought individual health insurance. It is also important to know that when you sign up for COBRA insurance, you will be responsible for any monthly premiums retroactively since the date of employment loss since the coverage covers that entire period. Your first monthly COBRA premium will cover that retroactive period. Also, some employers subsidize the cost of COBRA insurance so it is important to know this as you calculate your monthly COBRA insurance premium cost.
Under COBRA insurance benefits you will have the same deductibles, co-payments, and catastrophic limits that you had while you were covered under the employer's group health insurance plan. There will not be a change to these amounts unless the employer's makes changes the entire group insurance policy.
Normally COBRA health insurance benefits last for 18 months, however in some circumstances they may extend to 36 months if the covered employee has a second qualifying incident during the time they are covered by COBRA. COBRA insurance benefits start from the day that coverage was lost. However, there are many reasons that COBRA insurance coverage end coverage before the maximum allotment. COBRA coverage may be terminated early if you fail to pay your premium, if the employer ends their group health coverage, if health insurance coverage is provided by a new employer, or if the person qualifies for Medicare coverage during their COBRA coverage.
COBRA insurance benefits do not extend to federal employees, however federal offices offer a similar plan with the same benefits. Federal employees should contact their personnel office to become eligible for this program.
16. Can I elect for COBRA coverage if my company closes or stops offering a group health insurance plan?
If your former company closes or stops offering health insurance you are not eligible for COBRA insurance. However, if your company elects to use a different group health insurance provider, it is likely that you may qualify for COBRA insurance benefits through the new health insurance provider. If you are a Union member, it is likely that you can seek COBRA insurance through your union.
17. What COBRA insurance alternatives should I consider? What are my options if I do not want COBRA insurance?
- Individual Health Insurance
- Private Family Health Insurance
- Short Term Health Insurance
- Catastrophic Health Insurance Coverage
- High Deductible Health Insurance
- Maintain the exact same coverage you had with your employer, without interruption
- Under COBRA, all conditions are covered without limitations, exclusions, or waiting periods
- Guarantees continued coverage for you and your family
- Premiums can be extremely high and can increase if you opt to extend coverage
- COBRA insurance is a temporary fix
- COBRA insurance can not be customized to fit your budget or your specific health insurance need
- COBRA insurance is not the cheapest option for health care coverage
- Employees, spouses, or dependent children who have pre-existing health conditions that likely won't be covered under a new insurance provider.
- Those who expect to get on another employer-sponsored plan in the near future and only need a short term solution. Many outside insurance plans require that you sign up for a minimum period of coverage.
- Employees and their spouses over the age of 50
- Employees who are pregnant or have pregnant spouses or dependents or are planning to do so
- Have recently been declined for private health insurance coverage
- Have had an accident within the last 30-60 days
- Are currently taking expensive medication
- Have a history of health problems or recent health problems
- People who want continued, unchanged health insurance coverage and can afford the premiums
- Live in a state without competitive private health insurance options like New York or New Jersey
- Have no pre-existing health conditions
- Are young and generally healthy
- Qualify for a spouse's health insurance plan
- Qualify for a state sponsored health insurance plan like Medicaid OR have dependent children who qualify for state sponsored children's health insurance coverage
- Are not planning on undergoing any medical procedures in the near future
- Live in a state with a competitive private health insurance market like California, Texas, Florida, Michigan, Georgia, Illinois, Oregon, or Washington
- You qualify for a professional, alumni, or fraternal organization's health insurance coverage
- You are under 26 and can gain coverage under a parent's health insurance plan