Understanding COBRA coverage

Learn about coverage options if your health insurance through your job was impacted by COVID-19

With the impact of COVID-19, we're seeing unemployment increase across the country. If you lose your job, become furloughed or experience reduced hours and it changes your health insurance coverage, you may look into COBRA for health care coverage. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), a program that may help if you need coverage between jobs.

COBRA continuation coverage has been changed

On March 11, 2021, the American Rescue Plan Act of 2021 (ARPA) was signed. This act includes a 100% subsidy for COBRA continuation coverage premiums for: 

  • Those who experienced involuntary job loss
  • Those who experienced a reduction in hours of work leading to a loss in coverage

In other words, COBRA premiums would be covered at 100% for assistance eligible individuals (AEI), as defined under the Act, from April 1, 2021 through September 30, 2021. 

COBRA subsidy timeline

The COBRA subsidy will begin for coverage periods beginning on April 1, 2021 and ending on September 30, 2021. The subsidy would end sooner if: 

  • Your maximum COBRA coverage period ends
  • You become eligible for another group health plan or Medicare

Important details about COBRA timeframes

Under the Disaster Relief Notice issued in response to the COVID National Emergency, the timeframe has changed. The timeframe for electing and paying for COBRA is the earlier of (a) 1 year from the date you're first eligible for relief or (b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period), plus any remaining time under the plan.

You must elect COBRA coverage and make the required premium payment as outlined in your Qualifying Event Notice communication from your employer for coverage to be activated and claims to be paid. It is important to understand that coverage will not be activated, and claims will not be processed, until the required premium is paid.  If you do not make required premium payments timely, claims will not be paid until the premium payments are made.

How to know if you are eligible for the subsidy under ARPA

Here are the requirements to be considered an assistance eligible individual (AEI) under ARPA:

  • You lost coverage due to an involuntary job loss or a reduction in hours of work
  • You're an eligible COBRA participant and are still within the COBRA eligibility period as of April 1, 2021 or elected COBRA and discontinued it before April 1, 2021

Additional considerations

  • If you are an eligible COBRA participant, you have the opportunity to elect coverage during an Extended Election Period, even if you had not previously elected coverage. You will be able to take advantage of the subsidy effective April 1, 2021. This will be referred to as the "lookback period" in determining member eligibility.
  • The COBRA subsidy will start April 1, 2021 and may go through September 30, 2021.  
  • The ARPA will not extend the normal 18-month period of COBRA continuation coverage in the case of job loss or a reduction in hours.
  • If you are an eligible COBRA participant and you have an election in place as of April 1, 2021, you will be able to take advantage of the subsidy effective April 1, 2021.
  • If you are an eligible COBRA participant who became eligible for COBRA continuation coverage on or after April 1, 2021, you will be eligible for the subsidy while it is in effect.

COBRA frequently asked questions

If you have general questions about COBRA, here are some common questions and answers to help guide you on COBRA and other short term health insurance options that may help if you have a gap in coverage.

Short term health insurance

In times of change, find short term solutions that help you bridge the gap.

We're listening

We’re committed to keeping you up to date on COVID-19. We're taking note of your questions and working hard to provide answers. Let us know how we’re doing.

We’re making regular updates to the site. Please check back often for the latest information. 

Footnotes

  1. Product design and availability vary by state. Term lengths available vary by state.
  2. Part A and Part B Sign up periods, medicare.gov
  3. Read more about COBRA health coverage from the United States Department of Labor at COBRA Continuation Coverage. Personal or individual insurance is not the same as COBRA, so review your health insurance information carefully. Your time to elect COBRA is limited by law. Failure to elect and exhaust COBRA may eliminate your eligibility to enroll under HIPAA portability. You may have additional rights under state law.