How COBRA insurance works

If you lost your coverage through your work, COBRA is one of the coverage options you may consider. There are additional options, such as short term health insurance or Affordable Care Act (ACA) plans that you may also consider. Learn more about coverage options to consider. 

You may qualify for COBRA coverage if your job or life situation has changed. Here are some of the ways you may qualify:

• 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
• You experience a qualifying event, such as the death of the covered employee, a divorce or legal separation from the covered employee or another event that may entitle you to COBRA coverage. 

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.

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 COBRA⁴ continuation coverage that’s available to you. 

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.

Depending on your needs and situation, there are a number of other heath insurance options, besides COBRA, that may offer the coverage you're looking for. You may qualify for no cost or low cost plans, Affordable Care Act (ACA) plans or  short term plans for temporary coverage that can fill the gap until you find a longer term solution. These options may also cost less than COBRA continuation coverage, so it may be helpful to compare the cost and coverage options before you make a decision on your coverage. 

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 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. The extended timeframe for electing and paying for COBRA cannot exceed 1 year.

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.

The period of time for an employee to give notice of the qualified events of divorce, legal separation, loss of dependent child status, or disability determination has been extended until the earlier of: (a) 1 year from the day the qualifying event or, (b) 60 days after the announced end of the National Emergency. The extended timeframe to give notice of these events cannot exceed 1 year.

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 period⁵ 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 become entitled to Medicare after you’ve signed up for COBRA, your COBRA benefits cease. (But if COBRA covers your spouse and/or dependent children, their coverage may be extended for up to 36 months because you qualified for Medicare.) 

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.