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
- 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.
You may qualify for COBRA coverage if your job situation has changed in one of these ways:
- You lost your job, either voluntarily or by the decision of your company (for any reason except gross misconduct) and you have lost your health coverage
- You had the number of hours per week you work reduced so you no longer get benefits and you have lost your health coverage
If you had an involuntary termination of employment or reduction in hours within the last 18 months (prior to April 1, 2021) and did not already elect COBRA or dropped COBRA, there is now a new 60-day election period following the date that you receive a new required COBRA notice.
Check with your employer to learn the details of your furlough. In general, here are some guidelines:
- You would not be eligible for COBRA if your employer is still offering your group medical benefits while you're furloughed
- If your employer decided to discontinue offering group medical benefits to furloughed employees, then COBRA may be an option for furloughed, as well as laid off employees
In other words, if benefits are offered during furlough, COBRA is not an option. However, if your employer does not offer benefits to furloughed employees, COBRA would be an option.
If there is no longer a health plan, COBRA would not apply and you would need to look at other coverage options.
You may be able to get health care coverage through the Health Insurance Marketplace. It may also cost less than COBRA continuation coverage. There are special enrollment periods available if your job situation has caused you to have lost your coverage. You may also have special HIPAA enrollment rights under your spouse's plan if you had coverage under your employer's plan at the time your spouse enrolled in the other coverage.
You can also compare costs to see if a short term insurance plan would work for your needs. Standard short term health insurance plans may help you fill a gap in coverage from 1 month to just under a year.1
Yes, if you are 65 or older, there may be advantages to enrolling in Medicare before, or instead of, electing COBRA. In general, if you don’t enroll in Medicare Part A or B when you are first eligible because you are still employed, after the Medicare initial enrollment period, you have an 8-month special enrollment period2 to sign up for Medicare Part A or B, beginning on one of the following dates (whichever comes earlier):
- The month after your employment ends; or
- The month after group health plan coverage ends based on current employment ends.
If you don’t enroll in Medicare and elect COBRA continuation coverage instead, you may have to pay a Part B late enrollment penalty and you may have a gap in coverage if you decide you want Part B later. If you elect COBRA continuation coverage and later enroll in Medicare Part A or B before the COBRA continuation coverage ends, the Plan may terminate your continuation coverage. However, if Medicare Part A or B is effective on or before the date of the COBRA election, COBRA coverage may not be discontinued on account of Medicare entitlement, even if you enroll in the other part of Medicare after the date of the election of COBRA coverage.
If you are enrolled in both COBRA continuation coverage and Medicare, Medicare will generally pay first (primary payer) and COBRA continuation coverage will pay second. Certain plans may pay as if secondary to Medicare, even if you are not enrolled in Medicare.
COBRA is a short-term health care insurance that’s usually available for up to 18 months after the termination date of your job . (In some situations, COBRA coverage may extend beyond 18 months.)
You can get COBRA coverage if you worked for a business that employs 20 people or more. There are exceptions to this, so please call your COBRA administrator to get more information.
With COBRA, you can continue the same health care coverage through the plan you had when you were employed. That may include medical, dental and vision plans. If you choose to sign up for COBRA health care coverage, you won’t be able to choose a new plan or change the coverage you had under that plan until the next open enrollment, if your employer offers an open enrollment to active participants. You will be asked to choose and pay for the same health care coverage you had with the plan you were under when you were employed. For example, if you had a medical plan and a dental plan, you can keep one or both of them. But you wouldn’t be able to add a vision plan or change certain benefits within your medical plan if it wasn’t part of your plan before COBRA.
Your COBRA administrator should tell you within 14 days about the COBRA3 continuation coverage that’s available to you.
If you qualify for ARPA, there is a 100% subsidy, which means COBRA premiums are covered including the 2% administrative fee that health plans are permitted to charge for COBRA. This subsidy is available April 1, 2021 through September 30, 2021.
Under regular COBRA you’d have to pay the full premium for your health care coverage, plus an administrative fee. When you were employed, your employer generally paid for some of the cost of your health insurance premium, and now you will responsible for the full amount That means you may pay more for COBRA coverage.
Short term health insurance
In times of change, find short term solutions that help you bridge the gap.
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.
- Product design and availability vary by state. Term lengths available vary by state.
- Part A and Part B Sign up periods, medicare.gov
- 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.