COBRA

See how COBRA coverage can work for you

When you have a job change, you might hear the term Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). It sounds complicated, but COBRA may be a big help if you need health insurance when your job changes unexpectedly. Here’s what you need to know if you’re thinking of using COBRA to keep your insurance while you may be looking for a new job.

Qualifying for COBRA

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

Is COBRA an option for a furlough? 

You would need to check with your employer. If your employer does not offer benefits to furloughed employees, COBRA would be an option.

However, if you are furloughed and your employer is still offering group benefits during furlough, you would not be eligible for COBRA.

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. 

COBRA expanded through the American Rescue Plan Act of 2021 (ARPA)

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 timelines in place during the COVID-19 National Emergency 

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 (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.

Understanding what changed: Previous COBRA timelines in place before the COVID-19 National Emergency 

Before recent changes due to the COVID-19 National Emergency, the following timeline applied to COBRA. (See the new timeline information above or learn more about the changes due to ARPA.)

  • Within 60 days, you needed to decide whether to sign up for health care coverage with the COBRA administrator
  • Within 45 days, you needed to make an initial premium payment 

What’s covered under COBRA?

With COBRA, you can continue the same coverage you had when you were employed. That includes medical, dental and vision plans. You cannot choose new coverage or change your plan to a different one. 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 if it wasn’t part of your plan before COBRA.

Paying for COBRA

Under COBRA you’ll have to pay the full premium for your coverage, plus an administrative fee. When you’re employed, your employer generally pays for some of the cost of your health insurance. That means you’ll likely be paying more for COBRA – and it may get expensive, depending on the kind of coverage you have. 

COBRA coverage has limits

COBRA coverage is only a short-term solution, so it’s a good idea to explore other options. Besides the time limit referred to above, there are a couple of other reasons your COBRA coverage can end.

  • You don’t pay your premiums on time.
  • Your former employer stops offering any group health plans.
  • You get comparable coverage through a new job.
  • You — or another person who is covered — become eligible for Medicare.

Short term health insurance may be an alternative option for COBRA.

You can explore Affordable Care Act (ACA) options from multiple carriers in your area through our affiliated agency HealthMarkets. Or you can call 1-800-980-5213 or look for ACA plans on the Health Insurance Marketplace at Healthcare.gov.

Short term health insurance

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

Dental insurance

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Footnote

  1. 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.