What is COBRA Insurance?


Published in Health Articles

In 2019, 55.4% of Americans had employer-sponsored health insurance. But what happens if you find yourself no longer eligible for your health coverage? COBRA insurance could provide you with continued coverage.

Navigating your health plan options in this situation can be confusing. If you are wondering, “What is COBRA?”, stay tuned to learn the answer to this and your other burning COBRA questions.

What Is COBRA Insurance?

COBRA insurance is named after the federal law that regulates it: the Consolidated Omnibus Budget Reconciliation Act. This law required employers to offer health insurance to employees who become ineligible for the health insurance plan that the business offers.

COBRA also requires employers to offer continued coverage to the dependents and covered spouses of eligible employees. It only covers health plans, not life or disability insurance.

COBRA stipulates when and how employers must provide coverage, when an employee is eligible, and how long the employee has coverage.

Not every employer needs to offer COBRA insurance. Employers that must offer COBRA coverage must offer a private-sector group health plan to employees and have at least 20 full-time equivalent employees. You will need to check with your employer to see if they offer it.

Who Is Eligible for COBRA Insurance?

In order to meet COBRA eligibility, an employee must have been covered by the group health plan the day before a qualifying event. Qualifying events can include:

  • Termination of the employee or reduction in hours
  • Death of the employee
  • Dependent loses dependent status
  • Employee becomes eligible for Medicare
  • Employee legally separates or divorces from their spouse

However, if an employee is terminated due to gross misconduct, they are not eligible.

Individuals who qualify can include employees and their dependents, spouses, and former spouses. If a business files for bankruptcy, retired employees may also be eligible. Children that qualified individuals have or adopt during COBRA coverage are also covered.

How Does a COBRA Plan Work?

If you use a COBRA plan, you must receive the same coverage that is available under your group health plan. This means everything from the benefits, services, and copays to open enrollment and paperwork should be the exact same.

COBRA coverage can continue between 18-36 months. However, if the group health plan ends, COBRA coverage would end as well.

The cost of COBRA plans can be paid in a few ways. Some employers choose to pay for part of the health plan. However, others choose to have the qualified individual pay for the entire cost.

COBRA premiums cannot be more than the actual price of the plan. This COBRA cost is regulated by the Department of Labor. However, the employer may add a 2% charge to cover administrative costs.

If you are eligible for COBRA coverage, it can be helpful to shop around for short-term health plans and compare them to the COBRA cost. Get cobra medical insurance quotes to make sure you get a good premium for your coverage.

Get the Facts About COBRA Insurance

Figuring out “what is COBRA?” and if you are eligible for it can add a lot of peace of mind. COBRA insurance can be a helpful financial net for many employees and their families if your health insurance coverage ends for qualified reasons.

If you found this article helpful, be sure to read more of our articles.




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