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What COBRA Insurance Is and How It Works

The Federal COBRA Act gives workers and their qualified dependents the right to continue paying for their workplace health insurance if that coverage would end due to a qualifying event.

COBRA Insurance Is A Federal Law

In 1985, the United States government passed the Consolidated Omnibus Budget Reconciliation Act or COBRA, for short. The law gave workers and their families the right to continue their workplace health insurance coverage after a qualifying event occurs where they would otherwise lose their health plan.

Workers use COBRA after voluntary or involuntary termination. Additionally, COBRA continuing health coverage is available to former spouses after divorce, retirees before they begin Medicare and children that lose their dependent status.

COBRA is available to qualified beneficiaries who were on an employer group health plan for at least 1 day, where the business has 20 or more fulltime workers.

Rules And Deadlines For COBRA

In simple terms, this is how you obtain COBRA insurance:

  1. Your employer’s work health insurance ended due to a qualifying event
  2. Within 45 days of the qualifying event, the employer sends you an election notice to restart your workplace insurance
  3. Within 60 days of the election notice, you may choose to enroll back into your health plan where the coverage will pick up back up after making your first premium payment
  4. Your copays, coinsurance, deductibles, out-of-pocket expenses and insurance cards for the year stay the same
  5. You have 45 days to make your first COBRA premium payment
  6. The coverage is retroactive and any medical expenses you incur before the COBRA plan starts may be submitted for reimbursement

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Qualifying Events For COBRA Health Insurance Eligibility

Continuation of workplace benefits requires an eligible qualifying event, such as job loss, temporary reduction in hours or a family-related event such as the death of the covered employee or divorce from a spouse. When a qualifying event occurs, a special open enrollment period opens where your past employer is required to offer a continuation of your medical insurance coverage. As long as you were enrolled in a qualified group health plan for one day, you can continue that same insurance.

COBRA Eligibility

How Much Is COBRA?

Because COBRA is the same work health insurance you previously had, you pay the entire premium, including the employer’s portion they were paying.

When Does COBRA Coverage Begin?

Your coverage will begin immediately upon receipt of your first premium payment.

Employers Are Required To Provide COBRA Continuation

The COBRA law requires all companies with 20 or more full-time employees to provide continued access to the same group health plan to workers, if that health insurance would stop.

This means if you lose your work insurance, you may keep the same coverage you had.  The employer is responsible for notifying you of COBRA elgibility in a timely manner.

COBRA Is The Same Insurance You Had

By using your COBRA right, you simply have the same employer-sponsored health plan you just had before you lost it.

When you elect to stay on your employer’s health insurance, you keep your same doctors, copays and prescription coverage. If you had dental and vision coverage previously, then your COBRA will have dental and vision .

COBRA is Available For 18 or 36 Months

The good news for many people is that a COBRA health plan from their former employer satisfies the individual ACA mandate, while protecting their families health and wellbeing as they previously had. COBRA insurance coverage may last up to 18 months. Depending on your circumstances, you may be entitled to 36 months of continued coverage.

You May Cancel COBRA At Any Time

To cancel COBRA coverage, you will need to let your plan administrator know.

Health Insurance After Quitting Your Job

If your employer is required to allow you access to their group health insurance, then it doesn’t matter how your job ended. Your COBRA rights allow you the option of keeping your workplace insurance if you quit your job or the company downsized.

When Should You Choose COBRA?

If you have had recent or ongoing health problems, often times its best to stay on your former employer’s group health plan. Learn more about when to choose COBRA or look for an alternative for continued health insurance.

Some States Have Mini-COBRA

The federal COBRA act is in force for all companies with 20 or less employees. Many states have their own laws regarding continuation of workplace insurance. These “Mini-COBRA” laws may allow works more time to continue the insurance after the federal time period has been exhausted. You’ll have to check if your state has additional insurance laws.

Affordable COBRA Alternatives

If the cost of COBRA insurance is too much, you may want to consider a short-term medical plan.

If you are in reasonably good health and without pre-existing medical conditions, there are affordable temporary health insurance plans options available.

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