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COBRA for Participants

What Is COBRA?

There’s actually no specific type of insurance called Cobra insurance. Rather, the term comes from a provision in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which became a law in the United States in 1986.

Basically, COBRA health insurance coverage guarantees employees the right to keep their group health care coverage for up to 18 months when they would otherwise lose it after leaving their job. COBRA generally covers employees who resign or are terminated for any reason other than “gross misconduct.”

However, there is one big difference with COBRA coverage. While employees are guaranteed the right to the same health care coverage they previously had, they are required to pay for all of it out of their own pocket. Their former employer is not required to subsidize the payments. Employers often cover a substantial portion of health insurance premiums while you are employed, so COBRA coverage can be expensive.

COBRA Coverage can also be made available to an employee’s family members, sometimes for up to 36 months. COBRA is not available for individual health care plans that are purchased outside of a group plan through an employer or an association. If you lose individual health care coverage, there are no COBRA laws that require an extension.

COBRA Eligibility

COBRA does not cover all workers. For example, someone who worked for a company that had fewer than 20 employees in the previous year would not be eligible. Neither would those who were employed by the U.S. federal government or some religious or church-sponsored organizations. Employees of local and state governments, however, would be eligible.

How Is COBRA Coverage Provided?

You must contact your Human Resources Department and inform them when you have a qualifying life event, generally within 30 or 60 days of the event, depending on the type of event. Once your HR Department has been made aware of the life event, they are required to offer COBRA coverage to qualified beneficiaries. Each qualified beneficiary has the independent right to elect or decline coverage. From there, payments will be arranged through your company or their group health care provider.

When Does COBRA Coverage End?

COBRA Coverage can extend up to 18 months for the employee, and up to 36 months under certain conditions for a spouse or dependents. These are conditions that will cause COBRA coverage to end:

  • Reaching the last day of COBRA coverage (after 18-36 months)
  • Your employer ceases to offer a group health care plan (while you are still employed)
  • Your employer goes out of business
  • You obtain insurance coverage elsewhere
  • You don’t pay the premiums
  • You become entitled to receive Medicare benefits

Should I Elect COBRA Coverage?

In our opinion, health care insurance is essential. While COBRA can be expensive, it will allow you to keep the same group health care coverage as you had while you were with your employer. COBRA also extends to spouses and dependents in events such as a divorce or the death of an employed spouse. This may be their only way to maintain coverage.

More Questions About COBRA?

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