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Understanding COBRA Insurance


One of the perks of working full-time is the health insurance coverage that often comes as part of the employment package. About 149 million Americans are covered by their employer’s health plan, according to The Henry J. Kaiser Family Foundation. Employer-sponsored plans not only absorb some of the total health insurance costs, but they provide coverage to employees with pre-existing conditions such as diabetes or heart disease. In the past, pre-existing conditions might have shut a person out of health insurance or led to much higher premiums.

If you lose your job, you don’t have to give up your employer-affiliated health insurance coverage right away. You have the option of extending it, thanks to a program called COBRA. Yet with state and national health insurance marketplaces and other options in place today, COBRA may not be the most cost-effective insurance option.

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What Is COBRA?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It’s a fancy title for a federal law that allows you to keep your health coverage after you lose your job. It also lets your family members keep your insurance in other special circumstances.

COBRA covers you, your spouse, any former spouses, and children. It ensures that you continue to have the exact same health coverage benefits you were getting from your company prior to losing your job.

How Does COBRA Work?

COBRA applies to companies that employ at least 20 people. If you work for the federal government or for a church, you may not have access to this program.

You can qualify for COBRA if you get laid off, or if you lose your job for reasons other than gross misconduct. Another way to get COBRA is if your company reduces your work hours. Your family members can also qualify if you become divorced or suffer a premature death.

If you opt to take part in COBRA, you can continue on your existing employer health plan. However, your costs will go up because you’ll have to cover the portion of the plan that your company paid while you were working.

What Are My Alternatives to COBRA?

COBRA is a convenient way to keep your existing health insurance plan after you’ve lost a job, but it may not be the most affordable option. Before you sign up for COBRA, look into your other coverage options.

You may get more reasonable coverage on the government’s Health Insurance Marketplace or, if you qualify, through Medicare or Medicaid. You can also look into coverage through your spouse’s employer if you’re married. If you lost your job, you should be able to special enroll, meaning you can enroll in your partner’s plan or in a marketplace plan outside of the normal enrollment periods.

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How to Enroll

If you lost your health benefits because your employment situation changed, you should get a notice indicating your coverage is ending and offering you the choice to elect COBRA coverage. You have 60 days to decide if you want to enroll in COBRA.

If you qualify for COBRA because you were divorced from the employee or you’re a child who is no longer a dependent, then you will need to let the health insurance provider know within two months of the change.

How Long Does COBRA Coverage Last?

If you lost your job or your work hours were reduced, you’ll get up to18 months of continued coverage under COBRA. In some special cases, it can last for up to 36 months. You have the right to extend COBRA beyond 18 months if you become disabled.

You’ll lose your coverage however, if:

  • you don’t pay your insurance premiums on time
  • you start getting coverage under another health plan
  • you become eligible for Medicare
  • your company’s health plan no longer exists

To learn more about COBRA details, check with your state insurance commissioner:

You can also call the Benefits Coordination & Recovery Center at 1-855-798-2627.

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