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What is COBRA Health Insurance?
COBRA health insurance is a type of insurance that people can opt into temporarily after they quit or lose their job. With COBRA coverage, people can stay on the same employer-based health insurance plan that they had at their old job, usually for up to 18 months. This coverage is actually offered by most employers with group health plans.
COBRA health insurance came from the Consolidated Omnibus Budget Reconciliation Act. It is meant to prevent any gaps in health coverage for workers and their families after they leave a job.
Continued Medical Coverage
Making sure you always have continued medical coverage is important; any gap in insurance can be a serious risk. Medical bills can be astronomical—indeed, medical debts are the biggest cause of bankruptcies in the U.S.
When considering whether or not to opt into COBRA, there is some time allowed to make the decision, but only 60 days. If you opt into COBRA insurance, it is important to make sure you don’t accidentally lose it. Make sure to make the first payment on time, or you will lose your COBRA coverage permanently. Being late on any monthly payment that follows will also cancel your insurance, though paying it within the 30-day grace period can reinstate the coverage.
If you need more than 18 months’ worth of coverage, you may also be able to extend your COBRA coverage for up to 36 months in certain situations.
Who Qualifies?
There are three important factors that go into determining who is eligible for COBRA health insurance. These are:
- You have been covered under a group health plan. COBRA coverage may apply to your whole family, or you may have been the only person covered. In some cases, your family may still be eligible for COBRA insurance in the event of your death, divorce, switch to Medicare, or your kids growing up.
- Your group health plan qualifies under COBRA. Most employers who offer healthcare benefits also offer COBRA insurance to employees. This is not required of companies that have less than 20 employees, are going out of business, or end their health insurance plan for the whole company.
- You lost your group health plan. If you lost your health coverage after leaving your job, getting fired, or having your hours reduced, you qualify for COBRA healthcare coverage. There is an exception for those who were fired for gross misconduct, such as committing a crime. These employees may not be eligible for COBRA.
What Does COBRA Health Insurance Cover?
COBRA health insurance provides identical coverage to the plan the candidate’s employer has for its current employees. COBRA ends up being more expensive than the same plan would have been under the employer, because the employer is no longer paying a large portion of the plan.
COBRA Litigation
Employers are legally required to notify employees if they qualify for COBRA continued healthcare when they leave, as well as provide certain information about this plan. Several companies have been hit with class action lawsuits by former employees who allege that they were not given proper notice of the healthcare benefits they would receive under COBRA after they left the company.
