Is COBRA Eligibility the Same for Furloughs vs. Layoffs?

Many people who face layoff or furlough wonder if they are eligible for COBRA benefits. It can be scary to go from having group health coverage through work, to having to shop for new coverage. To help, we will explain the differences between a furlough and a layoff, how each one impacts your COBRA eligibility, what qualified events are, and the cost of continuing coverage.

Furlough or Layoff? Why It Matters for COBRA

Furloughs are typically temporary and come with a set end date. Furloughed employees are on unpaid leave but still remain on the books as employees. However, employers may extend furloughs or convert them into permanent layoffs.

Layoffs, on the other hand, end the employment relationship entirely. There’s no scheduled return-to-work date, and you’re no longer considered an active employee.

COBRA Eligibility

A “qualifying event” (QE) is an action that makes employees or dependents lose group health insurance coverage. People who have a QE have at least 60 days to choose whether they want to continue coverage on their own. Examples of a QE include:

• Job loss (unless due to gross misconduct)
• A reduction in work hours
• Divorce or legal separation from a covered employee
• The covered employee becomes eligible for Medicare
• The death of a covered employee

If you worked for a company with 20 or more full-time employees and have been laid off, you are eligible for full COBRA benefits under Federal law. If you were employed by a company with fewer than 20 full-time employees, you may be eligible for State Continuation benefits (State Continuation laws vary by state).

For furloughed employees, COBRA eligibility is not as straightforward. Your employer decides what COBRA benefits to make available, usually after talking with the insurance carrier and reviewing health plan documents.

COBRA Premiums: What You’ll Pay and Why

When you elect COBRA coverage, you are typically responsible for paying the entire premium. That includes both the employee’s share and the employer’s share.

In some cases, the employer share is larger than the employee share. As a result, the COBRA premium for group health insurance coverage could be more than twice what you were used to paying for the same coverage when employed.

Managing COBRA Costs

The high cost of COBRA is surprising for most people. However, you have options to manage COBRA affordability.

When electing COBRA, you have the ability to pick and choose which coverages to keep. You can decide whether to cover yourself, your dependents, or both. To make premiums more affordable, make sure you select only the essential coverages.

If you have a Health Savings Account (HSA), you can use HSA money to pay your COBRA premiums. FSA funds, however, cannot be used for COBRA premiums.

Conclusion

For more information on the COBRA rules that apply to your specific furlough or layoff situation, contact your HR department or COBRA benefits administrator.

Captain Contributor is a benefits education and engagement program developed by DataPath, Inc.