A Guide to COBRA Insurance Rules

Although millions of people may qualify for health insurance coverage under COBRA, many consumers do not know exactly what COBRA insurance rules are, or how COBRA works.

Consolidated Omnibus Budget Reconciliation Act

The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, was passed by Congress in 1985 in order to provide employees with the option of continuing their health coverage while in between jobs. Prior to the law, employees with employer-sponsored health insurance would immediately lose their health benefits after their employment ended. As many people do not immediately start a new job after leaving or being fired from an old one, this was leaving many consumers without health insurance for weeks or months at a time. Under COBRA, these people may be able to continue their old insurance until they start or find a new job.

How COBRA Works

COBRA allows people who are in between jobs to continue using their old health plan until they are able to obtain health coverage through a new employer. People may want to stick to the same health plan if it is important for them to continue seeing the same doctors.

However, although many people qualify for COBRA coverage, not everyone may be able to afford the insurance. While employer-sponsored health plans are generally partially paid for by the employer, COBRA is paid for entirely by the person covered by the plan, plus additional administrative fees. However, the cost of COBRA may still be less than the cost of individual health plans.

People are offered some time to make their decision of whether or not to opt into COBRA, but only 60 days. It is important to maintain continued medical coverage; lacking health insurance, even for a short while, can be a considerable risk. On that note, if you do opt into COBRA insurance, make sure you follow all the steps correctly to avoid accidentally losing your coverage—and the rules are strict.

For instance, if your first COBRA payment is late, you lose your COBRA coverage permanently. If your monthly payment is late any month thereafter, this will automatically cancel your insurance, though in these instances making that payment up within the 30-day grace period can have your coverage reinstated. While COBRA rules are rigid, in most circumstances you are given options for changing from COBRA to another option in the healthcare Marketplace—either through the Open Enrollment period or through a Special Enrollment period.

Your Right to Coverage

In order to qualify for coverage under COBRA, your group health plan must be covered by the act. COBRA generally applies to employer-sponsored health plans that cover 20 or more employees who work in the private sector, or in state or local government. Additionally, you must have either been terminated for a reason other than gross misconduct or had your hours significantly reduced.

Spouses of COBRA covered employees who get divorced also qualify, as do widows of COBRA covered employees. Employees who become eligible for Medicare may also qualify, as do children who lose their “dependent child” status.

How Long Does COBRA Last?

For employees who were terminated for reasons other than gross misconduct, COBRA may cover them for up to 18 months. For other qualifying events, including death or divorce, the maximum period of COBRA coverage goes up to 36 months.

How Do I Get COBRA?

Employees who have health plans that are covered by COBRA who have left their jobs or have been terminated must be given a notice of their eligibility to participate in COBRA within 44 days of termination. Under COBRA insurance rules, this notification letter must inform the employee of their rights and must contain details including the name of the qualifying plan that would continue under COBRA, the contact information for the plan administrators, the identification of the event qualifying the employee for COBRA, the identification of the potential beneficiaries, and the date that the current plan will end if the employee does not opt to be covered by COBRA. Additionally, the notice must inform employees of what will happen if they do not choose to be covered by COBRA.

According to some consumers, however, they have not received these notices following their job termination, or have received notices with missing information.

Several companies, like Pepsi Co. and Lowe’s,  have been hit with class action lawsuits by former employees who allege that they were not given proper notice of their COBRA eligibility, the benefits they would receive under COBRA, and how to continue under COBRA coverage.

If you were not sent a COBRA insurance notification after you left a job or were terminated despite qualifying for the program, you may be eligible to hire a qualified attorney and file a class action lawsuit against your former employer for failing to comply with the law.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential 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.