COBRA Insurance - An Overview
COBRA coverage allows employees to keep their healthcare coverage under their employer’s group plan after they have a qualifying event that would result in loss of coverage. Basically, COBRA is an emergency option that keeps people from losing their health insurance until they can find another job or other suitable coverage.
To be eligible, you must have been covered by your employer’s group plan before the qualifying event. This also applies to your dependents (spouse and/or children).
Generally, companies that employ at least 20 people must offer continuing coverage. COBRA also applies to group health plans sponsored by most state and local governments.
What is a Qualifying Event?
A qualifying event that could cause you to lose your group insurance coverage include:
- Job loss (for reasons other than gross misconduct)
- Reduction in work hours
- Divorce or legal separation from the covered employee
- Covered employee becomes eligible for Medicare
- Death of the covered employee
Your employer must give you at least 60 days to decide if you want to elect COBRA insurance. During the election period, you can even decline coverage, then change your mind and elect COBRA. Coverage starts on the day you elect.
You do not have to choose COBRA. You can shop around for other insurance coverage, including on exchanges setup by the Affordable Care Act (ACA).
Paying for COBRA
You (or your dependents) usually pay the full premium amount under COBRA. If the employer paid for part of the premium, you must pay that amount as well as your share.
As long as you were covered under the specific plan – health, vision, dental, etc. – you can pick and choose which coverages to keep. You can also choose who stays on the plan (if you have covered dependents). These options can help reduce the cost of COBRA coverage.
You can have COBRA coverage for no longer than 18 months. In some cases, you can get an 18-month extension (total 36 months).