How Long Does Cobra Insurance Last?

COBRA health insurance was created with the Comprehensive Budget and Reconciliation Act in 1985 and became effective in 1986. It provides the option to continue health insurance after you have left a job, provided that the separation was due to a “qualifying event.”

What’s a Qualifying Event?

Death, being fired or having your hours reduced,  divorce or separation (assuming you were covered under your spouse’s plan at the time of divorce), starting Medicare, or aging out of your parent’s health insurance plan, returning from military leave during which you did not maintain your health insurance enrollment, or return to work after a family or medical leave during which your health coverage lapsed, are all qualifying events. 

When Am I Not Covered by COBRA?

You are not covered by COBRA if you were fired for “gross misconduct.” The COBRA law does not define “gross misconduct.” The case law that has developed around COBRA suggests that in order to be considered gross misconduct, the offense must be connected to your job, you had the capacity to understand that it was an offense and how bad it was, and the offense must be willful (i.e., you can’t be denied COBRA because you violated a rule your employers never told you about). Layoffs and forced reductions in hours worked are considered the same as being fired.  

Anyone who was covered on your policy the day before the qualifying event is entitled to COBRA coverage. 

When Does It Begin?

COBRA coverage begins the day you lose your health insurance.

How Long Does It Last?

For an employee with COBRA coverage, it lasts 18 or 36 months from the date you select a COBRA plan (not the date of the qualifying event.) For this reason, it is good to start researching COBRA plans as soon as you are aware that a qualifying event may occur. If your reason for choosing COBRA is loss of employment or reduction of hours, the limit is 18 months. For any other qualifying event, it is 26 months. 

Does My Employer Have to Offer COBRA Coverage?

Employers who have more than 20 employees are required to offer COBRA if they offer health insurance. Under the Affordable Care Act (ACA, “Obamacare”) companies with an average of 50 or more full-time equivalent employees over the course of one year are required to offer health insurance. If your employer offered you health insurance, they have to offer you COBRA coverage in the event that a qualifying event occurs. If your employer is between one and 49 employees, it is unlikely that they offer health insurance. If they do and you did not sign up for it for some reason, you will not be eligible to enroll in COBRA if a qualifying event occurs. 

Does COBRA Cover More Than Basic Health Care?

If your employer offered medical savings accounts, vision care plans, prescription drug plans, hearing care plans, prescription drug plans, or mental health plans, you are eligible to continue them under COBRA if you were enrolled in them on the day the qualifying event occurred. This does not apply to life insurance, disability insurance, sick leave, or vacation leave plans. 

How Much Does COBRA Coverage Cost?

The employee pays the full cost of the coverage. Your employer may charge you two percent more than the cost of coverage to meet administrative expenses, and if your loss of work was due to disability, can charge 150% of the premium for months 18 to 29. 

If your employer was paying all or most of the premium, this figure may be quite a shock. In fact, you may find it unaffordable. Your company HR department can advise you about any choices you can make to reduce costs. 

What Are Some Important Dates to Remember?

Your employer must notify you that COBRA is available the first day you sign up for a health plan. After the mailing (or other sending) date of the notice that a qualifying event due to the employer’s choice (firing or layoff or reduction in hours), you have 60 days to advise the employer that you want COBRA coverage. After the employer receives that notice, the health plan administration has 14 days to notify you of coverage that may be available through the Federal or state health information exchanges, such as the Federal Health Care Exchange. 

When are My COBRA Payments Due?

After you choose COBRA coverage, you have 45 days to make the first payment. After that, premiums are due within 30 days of the date specified in the COBRA policy. Remember, your coverage may be cancelled if your premium is not paid or is late. 

Does Where I Live Make a Difference?

Yes. Your state may have laws that can be more generous than Federal laws regarding continuation of health care coverage. An insurance agent can advise you if this is the case. 

OK. I Know I Need COBRA – What Do I Do Now?

Your most important first step is to make sure you have all the information you need to make an informed decision to continue COBRA or seek another alternative. You may find alternatives to the high cost of COBRA that are just as good but more affordable. The state or Federal health insurance exchanges can tell you whether or not you qualify for government assistance with health care. 

Regardless, an insurance broker who represents multiple companies and is familiar with your state and Federal laws is your best source of information. Visit HealthCareInsurance.Company or call (855) 401-8383.