If you anticipate a change in your life, planning for health insurance after that change is an important part of maintaining your financial security and your health. A popular way to get health insurance after a major life event—that would otherwise cause a loss of coverage—is to continue your employer-sponsored health insurance usingCOBRAcontinuation coverage.
This article will explain what you need to know about COBRA eligibility, electing COBRA, and other alternatives that are available to you as well.
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If you get a divorce, become a widow or widower, lose your job, or have a reduction in work hours, losing your health insurance can add even more stress when your coping mechanisms are already maxed-out.
If you’re scrambling to find a new job, move, learn how to live without a partner, or all of those things at once, choosing a new health planin the individual marketcan be overwhelming.
(To be clear, selecting a new plan isn’t as hard as it might seem, and you’ll definitely want to compare individual market plans with the COBRA offer you receive. But in some cases, continuing your existing coverage via COBRA will be the best option).
With COBRA continuation coverage, you don’t have to pick a new plan. You simply continue the same employer-sponsored coverage you currently have. No starting over with a newdeductibleandout-of-pocket maximummid-way through the year. No finding a new healthcare provider because your current healthcare provider isn’t in-network with your new health plan. No transferring medical records or prescriptions.
COBRA will allow you to continue your current health insurance for up to 18 or 36 months (depending on your circumstances), which should hopefully be time enough to get back on your feet and obtain new coverage.
However, not everyone is allowed to use the COBRA law to continue their health insurance. Understanding whether or not you’re eligible for COBRA health insurance will help you plan for a secure future.
To be eligible for COBRA, you must satisfy all three of the following requirements:
Is My Health Insurance Subject to COBRA?
Not all health plans have to offer COBRA continuation coverage. Your plan does if it’s a group plan offered through a private-sector employer with at least 20 full-time employees (in many states, there arestate continuation laws—also called “mini-COBRA”—that give employees at smaller businesses an opportunity to continue their coverage). COBRA also applies to most state and local government health plans.
Not all states have “mini-COBRA” laws. And there is a lot of variation across those that do, with some only allowing coverage to continue for a few months and others opting to essentially mirror COBRA rules. If you work for a company with fewer than 20 employees, you’ll want to make sure you understand how the rules work in your state.
But when I quit my job working at a Kaiser Permanente hospital, I was eligible for COBRA health insurance. Kaiser is a large, private-sector, non-church related employer. Kaiser’s health plan was subject to the COBRA law; it had to offer me COBRA continuation coverage.
Am I a Qualified Beneficiary?
Do I Have a Qualifying Event?
What qualifies as a life event depends on whether you’re the employee losing coverage, or a spouse or dependent of that employee. Your life-event will qualify you for COBRA coverageif you’re the employeeand:
Your qualifying life event will make you eligible to continue your coverage with COBRAif you’re the spouse or dependentof the covered employee and you’re losing coverage because:
How Does My Health Plan Know to Offer Me COBRA?
If you’re eligible for COBRA health insurance, you won’t get a COBRA election notice from your health plan if the health plan doesn’t know about your life-changing event. Someone has to tell the health plan administrator. This is known as “giving qualifying event notice.”
The employer will tell your health plan if your loss of coverage is due to the termination of the employee, death of the employee, employee Medicare eligibility, or reduction of employee work hours. It’syour responsibilityto tell your health plan if your loss of coverage is due to divorce, legal separation, or a young adult losing dependent status under plan rules.
In some cases, you may be tempted to withhold notice. If the employer and health plan don’t know you’re legally separated, you might think you won’t have topaythe COBRA health insurance premiums. You’d just continue on with spousal coverage as though you’re a married couple. But this is not allowed.
You’rerequiredto give qualifying event notice in a timely manner. Not giving qualifying event notice is a type of fraud; you’re basically stealing health insurance coverage for which you’re no longer eligible. The employer may demand reimbursement for its share of the monthly premiums paid for the coverage you were no longer eligible to receive. The health plan may demand reimbursement for the health care it paid for while you were receiving coverage fraudulently.
That said, you don’t need to give notice while you’re going through divorce, or legal separation proceedings. You’re not obligated to give notice until the divorce or legal separation actually takes place.
COBRA and the COVID-19 Pandemic: Temporary Provisions Made COBRA More Accessible and Affordable
Due to the COVID pandemic, the Department of Labor issued rules that extended the deadlines for people to elect and pay for COBRA coverage. This continued through July 10, 2023, but the normal rules are once again in place, in terms of how long a person has to elect and pay for COBRA.
And for six months in 2021, the federal government also provided subsidies that covered 100% of the cost of COBRA coverage,for people who involuntarily lost their jobs or involuntarily had their hours reduced.This subsidy, created under the American Rescue Plan (H.R.1319) was available from April 2021 through September 2021.
When the federal COBRA subsidy ended on September 30, 2021, it triggered a special enrollment period for people who had been using it. They had the option to either keep COBRA and pay full price (assuming they hadn’t yet exhausted their COBRA benefit period), or transition to a self-purchased individual/family plan at that point.
And that continues to be the case; loss of a government or employer subsidy for COBRA will trigger a special enrollment period that allows the person to transition to a self-purchased plan instead of having to pay full price for COBRA.
How Should I Decide Whether to Continue My Coverage With COBRA?
There are several factors to keep in mind when you’re deciding between COBRA and a self-purchased plan in the individual market:
If you have the option to continue your health plan with COBRA, you don’t have to decide right away. You’ll have a 60-day window during which you can sign up for COBRA (it starts on the day you get the COBRA notification, or the day that your employer-sponsored coverage would otherwise end—whichever is later).
So if your coverage is scheduled to end on June 30, you could think about it for a while and then sign up for COBRA in August. You’d have to pay the premiums for July and August at that point, because COBRA is designed so that it’s seamless coverage—the plan you had through your job just continues to cover you, without any breaks.
And you also havea special enrollment period during which you can pick a plan in the individual market, either through the Marketplace/exchange in your state, or directly through an insurer (make sure you usethe exchangeif you’re eligible forpremium subsidies, as they aren’t available outside the exchange).
Your special enrollment period for individual market coverage starts 60 days before your employer-sponsored plan ends, and continues for another 60 days afterward.You have access to the special enrollment period regardless of whether you have the option to continue your employer-sponsored plan with COBRA. And your special enrollment period in the individual market continues for the full 60 days after your employer-sponsored plan would have ended,even if you elect COBRA during that time.
So you can take your time andcompare COBRAwith theoptionsthat are available in the individual market. But once your COBRA election window closes, it can’t be reopened.
And if you miss your special enrollment period for individual market coverage, you’d have to wait for the nextannual open enrollment period(November 1 to January 15 in most states) if you decided you wanted to enroll in an individual market plan instead of COBRA.
If you elect COBRA and then fully exhaust the coverage, you’ll have an opportunity to enroll in an individual market plan—or a plan from a new employer—at that point, as the termination of your COBRA coverage would trigger a special enrollment period. Butvoluntarytermination of your COBRA plan would not trigger a special enrollment period.
Summary
COBRA allows people to continue an employer-sponsored health plan after it would otherwise have become unavailable to them, although it’s not available in all situations. If COBRA is available, it’s important to carefully compare it with other options, including another employer’s plan or a self-purchased plan obtained in the individual/family market.
A Word From Verywell
If you’re leaving your job or losing access to an employer-sponsored health plan due to death, divorce, or turning 26, you may have access to COBRA. This would allow you to continue that coverage temporarily, but you’ll have to pay the entire premium yourself—including the portion that the employer previously paid on your behalf—in addition to a 2% administrative fee.
You might find that it’s more cost-efficient to switch to a self-purchase plan in your state’s health insurance exchange, but it will depend on a variety of factors. Take your time, seek help from a reputable insurance broker in your area, and ask lots of questions before you make a decision.
10 SourcesVerywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Centers for Medicare and Medicaid Services.COBRA continuation coverage questions and answers.Employee Benefits Security Administration United States Department of Labor.An employer’s guide to group health continuation coverage under COBRA.U.S. Department of Labor.FAQs on COBRA continuation health coverage for workers.Centers for Medicare and Medicaid Services.COBRA continuation coverage.U.S. Department of Labor, Health and Human Services, and the Treasury.FAQs about Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act, and Health Insurance Portability and Accountability Act implementation part 58.U.S. Department of Health and Human Services; Centers for Medicare and Medicaid Services.Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards.Kaiser Family Foundation.Employer health benefits, summary of findings.Norris, Louise. healthinsurance.org.How the American Rescue Plan Act will boost marketplace premium subsidies.Norris, Louise. healthinsurance.org.I’m leaving my job – and will lose my insurance – the last day of this month. Can I get new coverage effective the next month after my employer-sponsored coverage ends or do I have to take COBRA?U.S. Centers for Medicare and Medicaid Services.COBRA coverage and the marketplace.
10 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Centers for Medicare and Medicaid Services.COBRA continuation coverage questions and answers.Employee Benefits Security Administration United States Department of Labor.An employer’s guide to group health continuation coverage under COBRA.U.S. Department of Labor.FAQs on COBRA continuation health coverage for workers.Centers for Medicare and Medicaid Services.COBRA continuation coverage.U.S. Department of Labor, Health and Human Services, and the Treasury.FAQs about Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act, and Health Insurance Portability and Accountability Act implementation part 58.U.S. Department of Health and Human Services; Centers for Medicare and Medicaid Services.Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards.Kaiser Family Foundation.Employer health benefits, summary of findings.Norris, Louise. healthinsurance.org.How the American Rescue Plan Act will boost marketplace premium subsidies.Norris, Louise. healthinsurance.org.I’m leaving my job – and will lose my insurance – the last day of this month. Can I get new coverage effective the next month after my employer-sponsored coverage ends or do I have to take COBRA?U.S. Centers for Medicare and Medicaid Services.COBRA coverage and the marketplace.
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
Centers for Medicare and Medicaid Services.COBRA continuation coverage questions and answers.Employee Benefits Security Administration United States Department of Labor.An employer’s guide to group health continuation coverage under COBRA.U.S. Department of Labor.FAQs on COBRA continuation health coverage for workers.Centers for Medicare and Medicaid Services.COBRA continuation coverage.U.S. Department of Labor, Health and Human Services, and the Treasury.FAQs about Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act, and Health Insurance Portability and Accountability Act implementation part 58.U.S. Department of Health and Human Services; Centers for Medicare and Medicaid Services.Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards.Kaiser Family Foundation.Employer health benefits, summary of findings.Norris, Louise. healthinsurance.org.How the American Rescue Plan Act will boost marketplace premium subsidies.Norris, Louise. healthinsurance.org.I’m leaving my job – and will lose my insurance – the last day of this month. Can I get new coverage effective the next month after my employer-sponsored coverage ends or do I have to take COBRA?U.S. Centers for Medicare and Medicaid Services.COBRA coverage and the marketplace.
Centers for Medicare and Medicaid Services.COBRA continuation coverage questions and answers.
Employee Benefits Security Administration United States Department of Labor.An employer’s guide to group health continuation coverage under COBRA.
U.S. Department of Labor.FAQs on COBRA continuation health coverage for workers.
Centers for Medicare and Medicaid Services.COBRA continuation coverage.
U.S. Department of Labor, Health and Human Services, and the Treasury.FAQs about Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act, and Health Insurance Portability and Accountability Act implementation part 58.
U.S. Department of Health and Human Services; Centers for Medicare and Medicaid Services.Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards.
Kaiser Family Foundation.Employer health benefits, summary of findings.
Norris, Louise. healthinsurance.org.How the American Rescue Plan Act will boost marketplace premium subsidies.
Norris, Louise. healthinsurance.org.I’m leaving my job – and will lose my insurance – the last day of this month. Can I get new coverage effective the next month after my employer-sponsored coverage ends or do I have to take COBRA?
U.S. Centers for Medicare and Medicaid Services.COBRA coverage and the marketplace.
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