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What is COBRA Insurance?

What is COBRA Insurance?

Did you recently resign from, quit, or lose your job? If so, you have hopefully met with your Human Resources department to learn about your health insurance options, including signing up for COBRA insurance, also known as COBRA continuation coverage. COBRA, started by the federal government in 1985 to protect employees from suddenly losing health insurance, stands for the Consolidated Omnibus Budget Reconciliation Act. It is actually a federal law that employers must follow and allows workers who recently lost, quit, or resigned from their job to continue to be insured under their group health insurance plan for a pre-determined period as long as they meet the federal qualifications.

So what is COBRA Insurance?

First, one of the most important things to understand about COBRA insurance is that it is actually a law not a health insurance plan on its own. The COBRA insurance law allows eligible employees keep their group medical insurance that they had at their former employer, for up to 18 months. Most people will be eligible for COBRA insurance if they worked at a company with over 20 employees and were not fired for gross misconduct, like theft or sexual harassment.

Employees who quit, resign, or retire are also eligible for COBRA insurance.

So what's the catch? The main difference with COBRA insurance is that the employee is now responsible for the entire cost of health insurance. Since many employers pay anywhere from 50%-100% of this cost, many people find that under the federal COBRA insurance law, their monthly premium doubles at least. Given that most people are considering COBRA insurance after losing a job, COBRA insurance can be very expensive.

COBRA coverage does however extend to your family members and dependents. Generally COBRA insurance will cover anyone previously covered on the group health insurance plan and will provide identical coverage. That means the same doctors, co-payments, policies, etc.

How do I get COBRA Coverage/COBRA Insurance?

The best thing to do to get COBRA insurance is to reach out to your Human Resources department who will know if you qualify for COBRA insurance and have the necessary forms for you to elect to sign up for COBRA Insurance. This should happen within 30 days of losing, quitting, resigning, or retiring from your job. It is important to know that you can choose to elect COBRA insurance or decline it for each family member or qualified beneficiary and you are not required to sign everyone up.

How long does COBRA Insurance Last?

Under most circumstances, COBRA coverage lasts 18 months for the employee or until the employee finds another job or chooses alternative health insurance. In some rare circumstances, COBRA insurance can last up to 36 months. However, there are some reasons that your COBRA insurance coverage can end earlier. This includes:

  • Your employer terminating all group health insurance
  • Your employer going out of business
  • Anytime you do not make an on time payment
  • Anytime you become eligible for Medicare benefits
  • If you sign up for another health insurance plan

What COBRA insurance alternatives should I consider?

Need more information about COBRA insurance?

Learn more about COBRA insurance and COBRA insurance alternatives, including eligibility, COBRA insurance costs, enrolling and more.

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