How Does COBRA Insurance Work?
Understanding how COBRA works means knowing what happens after you lose employer-sponsored health coverage. From the notification you receive to the deadlines for enrolling and making payments, COBRA follows a defined timeline. The steps below outline what to expect so you can avoid a coverage gap.
When Will You Receive Your COBRA Election Notice?
You should receive your COBRA election notice within 45 days of the qualifying event. Your former employer has up to 30 days to notify the health benefits administrator. The administrator then has up to 14 days to send the official election notice describing your rights, deadlines, and enrollment instructions.
How Do You Apply for COBRA?
You have 60 days to sign up for COBRA continuation after receiving your election notice. If you do not enroll within that period, the right to continuation coverage ends. Learn how to enroll within the COBRA election period.
When is Your First COBRA Payment Due?
After you elect COBRA, you have 45 days to submit your first payment. Missing this deadline may result in cancellation of your coverage. See guidance on how and where to pay.
When Does COBRA Coverage Start?
Your COBRA coverage begins retroactively to the day your employer-sponsored insurance ended. If you enroll and pay within 60 days, coverage continues without a lapse. More information is available on start date rules.
How Long Does COBRA Last?
Standard COBRA continuation lasts up to 18 months. Certain situations may extend coverage. Plan dependents may qualify for up to 36 months. Learn how long COBRA lasts.
Cost of COBRA Health Coverage
The most common feedback about COBRA insurance is that it is too expensive. This is because individuals are required to pay the full cost of their health insurance premium, which was previously subsidized by their employer.
As a result, monthly premiums typically range from $400 to $700 per individual, depending on the plan and coverage.
Exclusions from COBRA Eligibility
While COBRA provides a continuous health coverage for many employees, certain groups and circumstances are not covered by COBRA continuation laws. Federal COBRA applies only to private-sector employers with 20 or more employees, leaving some individuals ineligible for coverage. Additionally, certain employers and situations are excluded from COBRA coverage:
- Federal Employees: Workers employed by the federal government are not covered under COBRA but may have similar rights under separate federal laws, such as the Federal Employees Health Benefits (FEHB) program.
- Church Employers: Organizations considered church employers are exempt from federal COBRA requirements.
- Small Employers: Businesses with fewer than 20 employees are not required to offer COBRA continuation coverage under federal law.
- Gross Misconduct Exception: Employees terminated due to gross misconduct are not eligible for COBRA coverage.
Regulatory Oversight
Federal oversight of COBRA is shared by the Department of Labor, the Department of the Treasury, and the Department of Health and Human Services. Each agency administers the provisions under its authority.
The Department of Labor oversees compliance for private-sector group health plans. The Department of the Treasury addresses the tax provisions, and the Department of Health and Human Services administers requirements for public-sector group health plans.
Availability of Mini-COBRA in Select States
In many states, businesses with a workforce of 19 or fewer employees are required by law to offer continued health insurance coverage to former employees, similar to the federal COBRA regulations. Please be aware that the deadlines and time frames for making a decision about coverage may differ based on state laws.
Find your state in the COBRA State-by-State Guide.
How To Get Health Insurance Between Jobs
Having health insurance during a period of transition between jobs helps prevent unexpected medical expenses. Reviewing available options can provide uninterrupted coverage until new employment begins. Here are three ways to remain insured between while between jobs:
- Continuing Current Coverage: COBRA allows individuals to maintain their existing health insurance plan without exclusions or pre-existing condition limitations. This option ensures access to medical care and prescriptions under the same coverage terms as the previous employer-sponsored plan.
- Affordable Marketplace Plans: The Affordable Care Act (ACA) marketplace offers comprehensive plans that are similar to employer-sponsored insurance. Many individuals qualify for federal subsidies, making these plans a cost-effective alternative. Marketplace plans also have limited enrollment periods following qualifying events.
- Short-Term Coverage: Short-term health plans provide temporary month-to-month coverage and can be a practical solution for those in good health or waiting for new employer-sponsored insurance to begin. Explore short-term health plans.
Alternatives to COBRA Coverage
If COBRA is unavailable or too expensive, finding a more affordable alternative health plan may be the right solution. Health plans like short-term health insurance plan, Affordable Care Act (ACA) marketplace coverage, or Medicaid may provide cost-effective solutions.
These temporary solutions, along with COBRA, offer ways to maintain health insurance during gaps between jobs.
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