How Much Does COBRA Insurance Cost?

COBRA, or the Consolidated Omnibus Reconciliation Act, offers health insurance coverage for people who have lost their job or are changing jobs.

COBRA coverage lets workers maintain their existing, employer-sponsored health insurance for a period of time in between jobs. Although COBRA health insurance is meant to be a temporary option, the COBRA insurance cost may be very high. While COBRA provides the same insurance coverage through the same provider that employees already have, it may cost up to four times as much as an employer-based plan.

Overview: COBRA

The Consolidated Omnibus Reconciliation Act (COBRA) was passed in 1985 and ensured that employees can continue their group health insurance coverage after a qualifying event. Group healthcare plans may have better coverage than what is offered in private or individual insurance plans, which can incentivize consumers to continue their healthcare coverage even if they no longer work for a company.

There may be applicable state laws that govern continuing healthcare coverage after a qualifying event. If a state’s laws are more protective than COBRA, these laws must be followed as well.

COBRA Coverage Available

COBRA coverage may be available for many people who are currently without employer-sponsored health insurance. There are several requirements that must be met in order to qualify for COBRA. The program only applies to private-sector companies who employ at least 20 people, as well as state and local government jobs.

Federal government, church, or church-related organization jobs are not covered under COBRA, regardless of how large the employer is. Additionally, businesses that are going out of business do not have to meet COBRA requirements.

A defining aspect of COBRA coverage is that the continued healthcare is only available after a qualifying event. COBRA may be an option for people who quit their job, are laid off, or are fired for reasons other than gross misconduct. It may also offer coverage for people who lose their insurance due to a loss of hours at their job, or due to divorce or the death of a spouse.

Although COBRA may be helpful for people who are in between jobs and need insurance, the program only allows workers to keep their health coverage for 18 months. Employers have the option to extend the healthcare coverage beyond the 18 months required by COBRA, but this is purely voluntary.

Additionally, the COBRA insurance cost may be much higher than what employees previously paid under their employer’s plan for the same coverage. For employees, group health coverage plans are less expensive because the employer covers part of that cost. For COBRA insurance, the former employee is forced to cover all of the costs for health insurance in addition to an administrative premium.

Dealing With a High COBRA Premium

COBRA may cost up to four times as much as an employer-based plan because all of the costs of the insurance fall on the insured person. While employers who offer health plans pay for a portion of the cost, consumers who are covered by COBRA are responsible for all of the costs associated with their insurance, as well as administrative fees.

According to a study from the Kaiser Family Foundation, the average cost for employees with employer-sponsored family health coverage was around $6,000, despite the overall cost of these plans averaging around $20,000. Without employer contributions, the COBRA insurance cost for the same plan may cost families the entire $20,000.

Pros and Cons

There are many pros and cons to consider when deciding whether the cost of COBRA is worth the coverage. COBRA may be the right option for consumers who want to keep their existing health plans and feel that is important to continue seeing the same doctors. It may also be the right choice for people who don’t have access to affordable health insurance.

However, COBRA insurance costs are substantial and some consumers may be able to purchase similar or better health plans through their new employer if they are changing jobs. Additionally, consumers who are married may be able to get coverage through their spouse which is more affordable than the COBRA. Some people may also qualify for insurance through Medicaid or the Affordable Care Act.

How to Sign Up

If you are eligible for COBRA, your employer should send you paperwork regarding the program within 30 days of your last day of work, or if you become eligible for Medicare. You will have 60 days from your last day of work to sign up for insurance through COBRA.

Some consumers claim that their employers have failed to send them notices about their rights under COBRA, or have sent notices with missing information regarding the health insurance. These notifications must inform employees of their health insurance rights, including the name of their plan, the date that the plan will be terminated unless the employee chooses COBRA, an explanation of what will happen if the coverage is not continued, an explanation of what their  COBRA coverage will include, and a date indicating when COBRA coverage may begin.

Individuals who fail to receive the proper COBRA notices or receive confusing notices about COBRA coverage may not realize what they are giving up if they fail to continue their coverage. This can have significant consequences if an unemployed person and their family are left without healthcare coverage. People who experienced insufficient COBRA notices may be able to take legal action.

If you received a COBRA notice that did not include all of the required information, or did not receive a COBRA notice at all when you should have, you may be eligible to join a COBRA coverage investigation. A COBRA lawsuit may result in a settlement or other compensation.

Join a Free COBRA Class Action Lawsuit Investigation

If you received a COBRA notice that did not fully disclose your rights and how to retain your health insurance following separation from your job, or you received no notice at all, you may be qualify to join this COBRA notice class action lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.