In a time that’s marked by employees getting laid off due to circumstances beyond their control, it’s important to understand your health insurance options, including COBRA coverage. 

What is COBRA?

The term COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act. This act allows you to keep using your former employer’s health insurance for a specified amount of time if you lose your job or only work part-time. 

There are limitations to how COBRA works, the employers who offer it, and employee eligibility. 

COBRA Insurance Limitations

When using COBRA, you have the same network and coverage, but your former employer isn’t responsible for paying your premiums. You’re now responsible for paying 100% of your insurance premiums. 

COBRA only covers medical, dental, and vision insurance. It doesn’t cover any life or disability insurance you may have had as part of your benefits package.

Does your employer offer COBRA?

Employers based in the United States and who have over 20 full-time employees must provide COBRA coverage. Employers who have under 20 employees still offer coverage options similar to COBRA but are known as mini-COBRAs.

Employers who are part of the private sector must offer COBRA to their employees. Federal employers do not offer COBRA but do offer similar coverage. 

Information about your employer’s COBRA coverage is available through your human resources department. 

Employee Eligibility for COBRA

To be eligible to use COBRA, you must meet several qualifications. 

  1. You have to enroll in the company-sponsored group health insurance plan before you lose your job. If you opt out of your employer’s insurance plan, you do not have access to COBRA coverage after you’re no longer working.
  1. You aren’t eligible for COBRA coverage if you lose your job due to gross misconduct. 
  1. You’re eligible for COBRA coverage if you still have your job, but your hours are reduced to part-time. 
  1. If your employer goes out of business or the number of full-time employees drops below 20, your company isn’t required to offer COBRA coverage. 
  1. You’re eligible to opt into COBRA for 60 days after you lose your job or have your working hours reduced. 

For those who are eligible to use COBRA, coverage lasts up to 18 months, unless there are extenuating circumstances. Circumstances where you can continue using COBRA for 36 months are the disability of a beneficiary, the death of the covered employee, or a similar situation. 

COBRA Coverage Termination

There are many situations where coverage ends before the 18-month deadline. A few examples are:

  • If you don’t pay your premiums 
  • Your former employer no longer offers group health insurance
  • You gain coverage through another group health plan (like with a new employer, a spouse’s employer, or through independent health insurance)

It’s important to know the costs and benefits of using COBRA coverage before making any decisions. To help you make an informed decision, here are the simplified pros and cons of using COBRA. 

Pros of COBRA Coverage

  • You have the same health insurance plan as when you were employed
  • Your dependents are eligible for coverage 
  • It can help bridge the gap between coverage from a previous employer and coverage from a future employer
  • You have 60 days to decide on accepting coverage

Cons of COBRA Coverage

  • You’ll have to pay higher premiums
  • Coverage only lasts for a limited time
  • If your former employer changes their coverage, your coverage changes too

The Latest News About COBRA

Because of the 2020 pandemic and the sudden increase in unemployment, there are recent updates to COBRA coverage that you could benefit from.

If you lost your job due to the pandemic, you may qualify for amended COBRA coverage. Through the American Rescue Plan Act of 2021, you could be eligible for 100% COBRA premium coverage from April 1, 2021 through September 30, 2021. 

We hope you’re never in a position where you need to use COBRA, but if you are, make sure you’re making an informed decision when deciding your next steps.