Cobra Insurance: Millions Enrolled

COBRA insurance, which stands for Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows employees to maintain their group health insurance for a limited time after a change in eligibility. COBRA is applicable to most private sector businesses with 20 or more employees and requires employers to continue their group health insurance plan after qualifying life events, such as termination, reduction in hours, divorce, or death of a covered employee. While there is no exact data on how many people are signed up for COBRA insurance, it is a valuable option for individuals to maintain health coverage during transitions.

Who is eligible for COBRA insurance?

To be eligible for COBRA insurance, you must meet several criteria. COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is a health insurance program that allows eligible employees and their dependents to continue receiving health insurance coverage in the event of job loss or a reduction in work hours. This typically applies to companies with 20 or more full-time employees, and the employees must have been enrolled in the company's insurance plan for at least one day.

There are three main conditions that must be met to be considered for COBRA coverage:

• A qualifying event must occur, such as job loss (except in cases of gross misconduct) or a reduction in work hours resulting in a loss of insurance coverage.
• COBRA must cover your group health plan.
• You must be a qualified beneficiary for the specific event.

For spouses and dependent children of a covered employee, additional conditions apply. The covered employee must either lose coverage, become eligible for Medicare, or experience divorce, legal separation, or death. In the case of a dependent child, they may qualify if they lose their dependent status under the plan.

It is important to note that COBRA coverage is not available if an employee loses their insurance coverage due to their company going out of business. Additionally, there is no minimum number of workdays required to be eligible, and part-time employees can be included to meet the 20-employee threshold.

Each state may also have its own rules for COBRA eligibility, so it is recommended to contact your COBRA Administrator to determine specific eligibility requirements.

How to apply for COBRA insurance

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, lets qualified workers keep their group health insurance for a limited time after a change in eligibility. This applies to most private sector businesses with 20 or more employees.

Check Your Eligibility:

You may qualify for COBRA health insurance if you experience a job termination, reduction in hours, divorce, widowhood, or other qualifying events. You can check your eligibility by taking the COBRA eligibility survey.

Read The COBRA Election Notice:

Your employer will send you a COBRA election notice within 45 days of the qualifying event. This notice will inform you of the cost of COBRA insurance and provide instructions on how to apply.

Enroll in COBRA:

You have a 60-day special enrollment period to sign up for COBRA. Follow the instructions in your election notice to restart your most recent employer health plan. Contact your previous employer's human resources department if you have any questions about how to re-enroll.

Pay Your Premiums:

You will typically have 45 days to pay your insurance premiums. Non-payment will result in cancellation of your coverage. Your coverage will be retroactive to the date your previous plan stopped, ensuring no lapse in coverage.

It is important to note that COBRA insurance can be expensive, as you may be responsible for the full cost of the premiums. There may be alternative coverage options available, such as enrolling in a Marketplace plan or Medicaid, if you decide not to take COBRA coverage.

How much does COBRA insurance cost?

The cost of COBRA insurance depends on what a specific health insurance plan costs. The monthly cost of COBRA insurance depends on what a particular health insurance plan costs.

The monthly premium for COBRA insurance can be expensive. The cost of COBRA insurance is the total amount previously paid by the company and the employee, without any subsidy from the employer. The cost of COBRA insurance is often misunderstood because it includes the entire monthly premium of the employer's plan, plus an additional 2% administration fee.

The average monthly COBRA premium cost ranges from $417 for an individual to $1,564 for a family plan. The average monthly cost of COBRA insurance premiums ranges from $400 to $700 per individual. In 2023, the average annual premium cost for employer-sponsored health insurance was $8,435 for individual coverage and $23,968 for family coverage.

The cost of COBRA can vary depending on where you live. COBRA is usually more expensive than individual insurance, especially if you qualify for ACA plan subsidies.

How long does COBRA coverage last?

The length of time that COBRA coverage lasts depends on the type of qualifying event that gave rise to the COBRA rights.

When the qualifying event is the covered employees/retirees' termination of employment or reduction in hours of employment, qualified beneficiaries are entitled to 18 months of continuation coverage. This includes situations where the employee:

• Voluntarily quits
• Is terminated involuntarily (fired)
• Has a reduction in hours that would make them no longer eligible for work health insurance

Employees who develop a disability, as determined by the Social Security Administration, within the first 60 days of receiving COBRA coverage are eligible for an additional 11 months of coverage, which equals a maximum coverage period of 29 months.

For other qualifying events, such as the death of the covered employee, divorce, separation or annulment, qualified beneficiaries are entitled to 36 months of continuation coverage. This also applies to adult children who lose their dependent child status at age 26.

It is important to note that COBRA coverage is temporary and provides a safety net between jobs. It gives individuals time to find another health plan or covers them until their next employer plan begins.

What happens when COBRA coverage runs out?

When your COBRA coverage runs out, you will need to find an alternative form of health insurance to avoid a lapse in coverage. You have options, and speaking with your current or former benefits manager can help. You can also consult your state's department of insurance website for more information.

If you don't find a new job with benefits before your COBRA coverage ends, you can enroll in a new health plan during the Special Enrollment Period. This period is triggered by the exhaustion of your COBRA coverage at 18 or 36 months. It is important to note that you will not be eligible for a Special Enrollment Period if your COBRA coverage ends due to non-payment of your premiums. In this case, you will have to wait until the Open Enrollment Period at the end of the year to enroll in a new health plan.

During the Special Enrollment Period, you can sign up for a new health care plan on the public or private health exchange. Alternatively, if you have a new employer, you can sign up for their group health plan if they offer one, as long as you have met their waiting period to join.

If you are deemed disabled within the first 60 days of your COBRA coverage, you may be eligible for an extension. Contact your plan administrator for more information.

Frequently asked questions