Cobra Life Insurance: What You Need To Know

COBRA insurance is a federal law that allows employees and their families to continue their health insurance coverage for a limited time after leaving their jobs or experiencing other qualifying life events. The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created in 1985 and applies to most private sector businesses with 20 or more employees. It requires employers to offer continuation coverage to those who qualify, helping to avoid interruptions in healthcare access and maintain benefits such as medical, dental, and vision services.

COBRA insurance eligibility

COBRA, the Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows qualified workers and their families to maintain their group health insurance for a limited time after a change in eligibility. COBRA insurance eligibility depends on three basic requirements:

Your Group Health Plan Must Be Covered by COBRA

COBRA applies to most private sector businesses with 20 or more employees. It requires employers to offer a temporary extension of health coverage, or "continuation coverage", in certain instances where coverage under the plan would otherwise end. This includes instances of voluntary or involuntary job loss, reduction in hours worked, transition between jobs, death, divorce, and other qualifying life events.

A Qualifying Event Must Occur

Qualifying events include termination or a reduction of a covered employee's hours, divorce or legal separation from a covered employee, death of a covered employee, Medicare eligibility for a covered employee, and loss of a child's or dependent's health insurance coverage under the plan.

You Must Be a Qualified Beneficiary for That Event

Qualified beneficiaries under COBRA include the covered employee, their spouse, their dependent children, and in some cases, retired employees. If you are a dependent, spouse, or retired employee of someone who qualifies for COBRA based on the above events, you may also be eligible.

To determine your eligibility for COBRA insurance, you can contact your employer's human resources department or the insurance carrier for the health plan.

COBRA insurance costs

The cost of COBRA insurance includes the entire monthly premium of the employer's plan that is being continued, plus the additional 2% in administration fees. The average monthly cost of COBRA insurance premiums ranges from $400 to $700 per individual. To estimate monthly COBRA costs, individuals can identify the amount deducted from their paycheck for health insurance and add this to the amount contributed by their employer. This will provide an estimate of the total monthly cost for continuing coverage under COBRA.

COBRA insurance is typically more expensive than employer-sponsored insurance because the individual is responsible for the entire premium amount without the employer's financial contribution. In 2023, the average annual premium cost for employer-sponsored health insurance was $8,435 for individual coverage and $23,968 for family coverage. Employers covered, on average, $7,034 of the individuals' premium and $17,393 for families. With COBRA insurance, individuals are responsible for the full amount. This could result in average monthly premiums of $703 to continue individual coverage or $1,997 for family coverage, or even more.

COBRA insurance alternatives

COBRA insurance, which stands for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows qualified workers to keep their group health insurance for a limited time after a change in eligibility. This is particularly useful for those who have lost their jobs, recently become divorced, or experienced another qualifying event. However, COBRA insurance can be very costly, with monthly premiums close to a thousand dollars in some cases.

Health Insurance Marketplace

Marketplace insurance, available through the Affordable Care Act (ACA), is a popular alternative to COBRA. It often provides more affordable options, with a range of plans to suit different needs and budgets. The marketplace allows for the comparison of plans based on coverage, cost, and network of providers. Up to 80% of individuals who apply for a marketplace plan receive a government subsidy to offset premium costs.

Short-Term Insurance

Short-term health insurance is a temporary solution for individuals transitioning between jobs or health plans. It is often more affordable than COBRA but offers less comprehensive coverage. Short-term insurance is ideal for individuals in good health who need essential coverage for a brief period. These plans usually have much lower premiums than COBRA but may have high deductibles.

Medicaid

Medicaid offers low-cost or free health coverage for eligible low-income individuals and families, including seniors and people with disabilities. Eligibility varies by state but is generally based on income, family size, and specific circumstances. Other government programs, such as the Children's Health Insurance Program (CHIP), also offer coverage options for those who may not qualify for Medicaid.

Spouse's Coverage

If you are married, you may be able to enrol in your spouse's health insurance plan. This option typically costs less than signing up for your own insurance but may not offer the same level of medical benefits as your original plan. Spouse coverage can be either temporary or long-term, depending on the scope of the medical insurance plan.

Long-Term Coverage via Special Enrollment Period

Losing your health insurance or qualifying for COBRA gives you access to a special enrollment period to buy long-term coverage on or off the marketplace. These plans usually cost less than COBRA but may not be a good option if your new job offers different health insurance. This coverage is ideal for those who believe their unemployment will not be temporary.

COBRA insurance enrolment

COBRA, the Consolidated Omnibus Budget Reconciliation Act, allows employees and their families to maintain their group health insurance for a limited period after a change in eligibility. This federal law, created in 1985, applies to most private-sector businesses with 20 or more employees.

COBRA insurance is typically used to continue health coverage after a job loss or another qualifying event. Qualifying events include:

• Termination or a reduction of a covered employee's hours
• Retirement
• Divorce or legal separation from a covered employee
• Death of a covered employee
• Medicare eligibility for a covered employee
• Loss of a child's or dependent's health insurance coverage under the plan

Within 45 days of the qualifying event, the employer must send an election notice to continue workplace insurance. Individuals then have 60 days to decide whether they want to continue their health coverage under COBRA. If they elect to do so, their coverage will start the day after their employer's plan coverage ends, and they will have access to the same benefits, doctors, and providers as before.

COBRA coverage can last for 18 or 36 months, depending on the qualifying event. Individuals are responsible for the full premiums and any administrative fees, which can make COBRA significantly more expensive than an employer-sponsored plan.

To enrol in COBRA, individuals should contact their employer's health insurance plan administrator to confirm their eligibility and complete any necessary steps.

COBRA insurance coverage

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, is a federal law that gives workers and their families who lose their health benefits the option to continue their current group health insurance coverage for a limited time after a change in eligibility. COBRA insurance coverage is applicable in certain situations, often referred to as "qualifying events", such as:

• Termination or a reduction of a covered employee's hours
• Divorce or legal separation from a covered employee
• Death of a covered employee
• Medicare eligibility for a covered employee
• Loss of a child's or dependent's health insurance coverage under the plan

COBRA qualified beneficiaries include the employee, their spouse, former spouse, and children. Coverage for dependents is also available even if the former employee does not sign up for COBRA themselves.

The length of time that COBRA benefits last depends on the qualifying life event experienced. In some cases, it may be for 36 months. If an individual's hours were reduced or their job was terminated, they can receive COBRA benefits for 18 months.

To be eligible for COBRA, there are three basic requirements:

• The group health plan must be covered by COBRA.
• A qualifying event must occur.
• The individual must be a qualified beneficiary for that event.

Once a qualifying life event happens, the individual or their employer will notify the health plan. The plan will then send an election notice that the individual will have 60 days to respond to. If the individual elects to take COBRA coverage, their employer may pay a portion of or the full amount of their insurance premium.

Frequently asked questions