The American Cancer Society does not offer legal advice. This information is intended to provide general background in this area of the law.

COBRA stands for the Consolidated Omnibus Reconciliation Act, which became law in 1986. COBRA gives you the right to choose to temporarily keep the group health insurance benefits that you would otherwise lose after you reduce your working hours, quit your job, or lose your job. It also lets family members choose to keep health insurance after your job loss or other qualifying event that would normally cause them to lose the coverage they have through your employer. (See below, "What is a qualifying event under COBRA?") COBRA applies only to employers with 20 or more employees.

Before this law went into effect, when employees left their companies, they and any covered family members lost their health insurance immediately. If the employee or a family member were ill, they were often not able to get new health insurance because they were already sick. COBRA allows an employee to buy health insurance through the employer even though the person no longer works there or no longer works full time.

How long does the COBRA coverage last?

The length of time you can keep COBRA coverage depends on your qualifying event (see below). If your major medical coverage ends because your employment ends (other than for gross misconduct), or because your hours are reduced, you and your qualified dependents are allowed to keep coverage under the employer's health insurance for up to 18 months.

Also, under the Health Insurance Portability and Accountability Act of 1996, certain people with a disability are allowed to qualify for 29 months (the original 18 months plus an 11-month extension) of COBRA continuation coverage. To qualify for this disability extension, the person must get a formal disability determination from the Social Security Administration (SSA) that shows they were disabled at the time (or within 60 days) of their COBRA qualifying event. This means that the person must apply for disability through the SSA and wait for their decision (determination) about whether or not he or she is truly disabled. After getting the SSA decision, the employee must send a copy of the letter to the insurance plan administrator.

Lastly, dependents who lose job-based coverage due to a change in the family (such as divorce or other qualifying event) can still get COBRA coverage for up to 36 months. (See below, "What is a qualifying event under COBRA?") People with COBRA coverage have the same health benefits and rights as active employees. For example, they can change plan options during open enrollment periods and parents can add newborns and newly adopted children to their COBRA policies.

What is a qualifying event under COBRA?

A qualifying event is what makes employees or their dependents eligible for COBRA coverage. Qualifying events for the employee include loss of health insurance for any of the following reasons:

• termination of employment (employee quits job, is laid off, or fired for anything other than gross misconduct)
• reduction in work hours (for reasons other than gross misconduct)

Qualifying events for the spouse or dependents of the employee who had been included on employee’s health plan include:

• the insured employee's death
• divorce or legal separation from the insured employee
• loss of dependent status (as defined by the insurance plan's rules)
• employee becomes entitled to Medicare and the employer takes him or her off the health insurance plan
• any event in the list above that causes the employee to lose health coverage

The employee's qualified spouse or children may enroll in COBRA even if the employee does not.

What is a qualifying event notice under COBRA?

Before a group health plan must offer COBRA coverage, the group health plan must be notified of the qualifying event. The employer has 30 days after the event happens to notify the plan if the qualifying event is any of the following:

• employee job loss
• reduced hours of the employee
• employee death
• Medicare eligibility of the employee
• employer files for bankruptcy

The employee or dependent must notify the group health plan within 60 days of family changes:

• divorce
• legal separation
• child's loss of dependent status

How to go about doing this should be outlined in the summary of plan description (SPD) you get from your employer when you enroll in a health plan. If your employer does not have a reasonable procedure for notifying the health plan, you can give notice by contacting the person or unit that handles your employee benefits.

What is an election notice?

Within 14 days of getting the qualifying event notice (above), the health plan must give the person who is about to lose health insurance written notice of his or her COBRA rights. The election notice should contain all of the information you will need to understand COBRA coverage so that you can make an informed decision on whether or not to continue coverage. It should also give you the name of the person who handles COBRA for the health plan (the COBRA administrator) and tell you how to get more information.

What do I do once I get the COBRA election notice?

The employee or qualified dependents have 60 days after receiving the election notice to choose health insurance coverage for themselves under COBRA. The employee or dependent must notify the COBRA administrator listed on their COBRA election notice in writing if they wish to keep their health insurance. The COBRA administrator is the person who keeps up with COBRA continuation benefits for the employer.

How long do I have before I must pay the first COBRA premium?

The beneficiary has 45 days from the date he or she decided to continue health insurance coverage to pay the first bill. That payment generally must cover the period of coverage from the date COBRA was chosen all the way back to the date of the loss of coverage due to the qualifying event. Neither the health plan nor the employer is required to send you monthly premium notices or "bills," so make sure you pay attention to due dates.

How much does COBRA cost?

The premium for COBRA coverage is equal to the full cost of your group health coverage – including the employer and employee share – plus up to 2% more for administrative costs. This is usually much more than the employee paid when he or she worked for the company, since the company then probably paid for part of the premium. Still, it is usually less costly than buying individual health coverage. Some employers may give the option of dropping out of "non-traditional" insurance plans, such as dental and vision coverage, in order to reduce costs.

If you have already had the 18 month standard COBRA coverage and have started on the 11-month disability extension, the premium may be much higher. In this situation, the employer may charge up to 150% of the actual insurance cost.

How long do I need to have a job in order to be covered under COBRA?

You are eligible for COBRA coverage if you were covered under the group health plan on the day before your qualifying event. This 1-day rule also applies to your spouse and dependents who were covered under the plan.

Under what conditions is COBRA discontinued?

COBRA coverage is discontinued under the following circumstances:

• The covered person becomes covered under another group plan or becomes eligible under Medicare. If the new plan has a waiting period for pre-existing conditions, you may choose to have coverage under COBRA along with the new plan.

• The covered person does not pay the premiums for the continued coverage. There is a 30-day grace period to pay premiums, but your coverage may be put on hold for late payments. For example, if you do not pay a premium by the first day of a period of coverage, the plan may cancel your coverage. But if you pay before the grace period ends, they will reinstate coverage retroactively back to the date your COBRA coverage started. If you don't pay in full before the end of the grace period you could lose all COBRA rights.

• The employer stops providing a group health plan to any employees.

The employer is required to notify the employee if COBRA is canceled early.

Is my dependent eligible for COBRA if his or her insurance coverage with my plan ends?

If coverage for your dependent(s) ends for the following reasons, their coverage may be continued for up to 36 months:

• your death
• your divorce or legal separation
• a dependent’s change in status to ineligible under your health insurance plan (a child comes of age, gets married, etc.)

What about the person who has been covered under COBRA for 36 months and is almost but not quite 65?

Thirty-six months is the maximum amount of continuation coverage under COBRA. Employers may extend your continuation coverage for a longer period, but COBRA does not require it. A few states require group health insurers they regulate to extend continuation coverage until the age of Medicare eligibility.

What happens to COBRA coverage if a person's disability has ended?

If Social Security has determined the disability no longer exists and the person is not employed, COBRA coverage may be discontinued in the month that begins more than 30 days after Social Security's decision. The beneficiary is responsible for notifying the health insurance plan administrator of the final determination.

Rising medical costs have made health insurance a household necessity for most people, especially those with major illnesses such as cancer. The COBRA law gives people a chance to hold on to this important benefit for a while longer. Still, workers need to be aware of changes in health care laws to keep their benefit rights. A good place to look is in your health insurance plan booklet or with the person who manages your plan. Most of the specific rules on COBRA benefits can be found in 1 of these 2 resources.

How can I find out more about COBRA?

For more information about COBRA, call the Employee Benefits Security Administration at 1-866-444-3272 or visit the Web site at: www.dol.gov/ebsa/faqs/faq_consumer_cobra.html. You can also find a detailed brochure, An Employee's Guide to Health Benefits Under COBRA, on the Web at: www.dol.gov/ebsa/pdf/cobraemployee.pdf. If you have questions about your state's requirements about COBRA and health insurance, you can find your state's insurance department by contacting the National Association of Insurance Commissioners (see "Additional resources" section below).

Additional resources

More information from your American Cancer Society

The following related information may also be helpful to you. These materials may be ordered from our toll-free number, 1-800-ACS-2345.

National organizations and Web sites*

In addition to the American Cancer Society, other sources of patient information and support include:

Centers for Medicare & Medicaid Services (CMS) - HHS
Toll-free number: 1-800-633-4227
TTY: 877-486-2048
Web site: www.cms.hhs.gov

Health Insurance Info, Georgetown University Health Policy Institute
Web site: www.healthinsuranceinfo.net

National Association of Insurance Commissioners (NAIC)
Toll-free number: 1-816-842-3600 (866-470-NAIC)
Web site: www.naic.org

Patient Services Incorporated (PSI)
Toll-free number: 1-800-366-7741
Web site: www.uneedpsi.org

U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Toll-free number: 1-866-444-3272 (866-444-EBSA)
Web site: www.dol.gov/ebsa

*Inclusion on this list does not imply endorsement by the American Cancer Society

No matter who you are, we can help. Contact us anytime, day or night, for information and support. Call us at 1-800-ACS-2345 or visit www.cancer.org.

References

US Department of Labor, Employee Benefits Security Administration. An Employee's Guide to Health Benefits Under COBRA. The Consolidated Omnibus Budget Reconciliation Act of 1986. September 2006. Available at: www.dol.gov/ebsa. Accessed February 29, 2008.

US Department of Labor, Employee Benefits Security Administration. Continuation of Health Coverage -- COBRA. Available at: www.dol.gov/dol/topic/health-plans/cobra.htm. Accessed February 29, 2008.

Revision date: 03/17/2008