COBRA: Keeping Health Insurance After Leaving Your Job
Rising medical costs have made health insurance a household necessity for most people, especially those with major illnesses like cancer. The COBRA law gives people an option to keep workplace health insurance for a while longer if they can’t get coverage through their spouse’s job or the health insurance marketplace. Workers need to be aware of health care laws that allow them to find or keep the health insurance they can best afford.
For detailed information about COBRA, call the Employee Benefits Security Administration at 1-866-444-3272 or visit their website at www.dol.gov/ebsa. You can also find a detailed brochure called An Employee’s Guide to Health Benefits Under COBRA, online at www.dol.gov/ebsa/pdf/cobraemployee.pdf.
Another good place to learn more details about COBRA is in your health insurance plan booklet or the person who manages your plan. Most of the specific rules on COBRA benefits can be found in one of these resources.
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 More information from your American Cancer Society.)
What Is COBRA?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It gives employees the right to pay premiums for and keep the group health insurance that they would otherwise lose after they:
- Reduce their work hours
- Quit their jobs
- Lose their jobs
Most people can keep the insurance for up to 18 months. Some people may be able to keep it a few months longer.
The Affordable Care Act changes coverage
Before the new health care law known as the Affordable Care Act (ACA) became law, people with a pre-existing condition (an existing health problem) such as cancer could be charged more or even denied coverage when they tried to buy health insurance on their own. As a result, COBRA was often the only health coverage option available to cancer patients and survivors who made job changes.
The ACA made major changes to health insurance in the US. The ACA can make health insurance more affordable for people with cancer. It’s also intended to make sure that most insurance plans cover the health care that cancer patients and survivors might need.
The state insurance marketplaces created by the ACA offer more health insurance options to people who don’t have access through their employers. It can also help those who leave their jobs and lose their employer’s group insurance. And for some people, buying insurance through their state’s marketplace may cost less than paying for COBRA coverage.
COBRA vs. individual insurance through your state’s marketplace
For some people, COBRA can still be a good plan. But if you lose your group coverage because you lost or quit your job, compare your COBRA group plan benefits and costs to the individual health plans you can buy on your state’s marketplace. Keep in mind that if you’ve lost your job, your lower income may qualify you for financial help buying a plan on the marketplace. You’ll also have a special enrollment period for buying a marketplace plan.
Before you choose COBRA, be sure that you’re OK with the plan and its cost, at least until your state’s next open enrollment period. (Open enrollment is the time when you can make changes in your coverage without penalties.) For more on this, see the section “Can I stop or skip COBRA and buy a marketplace plan?”
How long does the COBRA coverage last?
The length of time you can keep COBRA coverage depends on your qualifying event (see the next section). 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 can keep coverage under the employer’s health insurance for up to 18 months by paying for the full cost of the coverage.
Note that a few states require employers to offer COBRA coverage for a longer time than federal laws do. Again, your state insurance commissioner’s office can tell you more about this.
What is a “qualifying event” under COBRA?
A qualifying event causes employees or their dependents to lose their group health coverage but lets them qualify for COBRA coverage.
Qualifying events for the employee
Qualifying events for the employee include loss of health insurance because of:
- Termination of employment (The employee quits, is laid off, or fired for anything other than gross misconduct.)
- Reduced work hours (for reasons other than gross misconduct)
Qualifying events for the spouse or dependents of the employee
Qualifying events for the spouse or dependents of the employee who had been covered on the 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 eligible for 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 administrator must be told about the qualifying event. The employer has 30 days after the event and must notify the plan if the qualifying event is any of these:
- Employee job loss
- Reduced hours of the employee
- Employee death
- The employee becomes eligible for Medicare
- Employer files for Chapter 11 bankruptcy
The employee or dependent must notify the group health plan administrator within 60 days of these family changes:
- 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 doesn’t have a procedure for notifying the health plan, you can give notice by contacting the person or department that handles your employee benefits.
What is an “election notice?”
Within 14 days of getting the qualifying event notice (above), the employer or health plan administrator must give the person who’s about to lose health insurance written notice of his or her COBRA rights. This written notice is called the election notice. It should contain all of the information you’ll need to understand COBRA coverage so that you can make an informed decision about whether 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 they get 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 benefits for the employer.
How long do I have before I must pay the first COBRA premium?
You have 45 days from the date you chose to continue health insurance coverage with COBRA to pay the first premium 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.
Note: Neither the health plan administrator nor the employer is required to send you monthly premium notices or “bills,” so it’s up to you to pay attention to due dates.
How much does COBRA cost?
The premium for COBRA coverage equals 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 you paid when you worked for the company, since the company then probably paid for part of the premium. Some employers may give you the option of dropping out of “non-traditional” insurance plans, such as dental and vision coverage, in order to reduce costs.
If you’ve 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 case, the employer may charge up to 150% of the actual insurance cost.
Starting January 1, 2014 state insurance marketplaces created by the new health care law (the ACA) will offer more insurance options that you may find more affordable than COBRA, Low- and middle-income families may also qualify for financial help to pay for health insurance bought in the insurance marketplace.
How long do I need to have a job 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.
Can I stop or skip COBRA and buy a marketplace plan?
If you do not choose COBRA and never pay any of the premiums for it, the loss of group coverage triggers a special enrollment period on your state health insurance marketplace. This means you can enroll in a marketplace plan at that time, even if it’s outside the normal “open enrollment” period in the marketplace. (Open enrollment is the time when you can enroll or make changes in your coverage without penalties.) You’ll have 60 days as a special enrollment period. The fastest ways to get a plan on the state marketplace are:
- Find your state's marketplace website: visit www.healthcare.gov, select “enroll”, and choose the state where you live
- the 24/7 marketplace helpline 1-800-318-2596
If you keep COBRA coverage until it runs out, you will again qualify for a special enrollment period in your state marketplace.
If COBRA coverage is started but then stopped at a time other than during the state marketplace open enrollment period, you’ll have to wait until the next marketplace open enrollment period to apply for coverage. This means you will not have health insurance for a time. Once you’ve started COBRA, you can get a special enrollment only if coverage is exhausted or the employer stops providing a group plan to all employees.
If you choose COBRA, it’s important to be aware of the risks of stopping it before it runs out. You’ll want to coordinate the start of new coverage so you don’t face a gap in coverage while getting treatment or follow-up care.
US Department of Labor, Employee Benefits, Security Administration (EBSA)
Toll-free number: 1-866-444-3272 (1-866-444-EBSA)
Information on employee benefit laws, including COBRA, FMLA, and HIPAA requirements of employer-based health coverage and self-insured health plans. Also has information on recent changes in health care laws. Benefits Advisors are available to help people with benefits problems.
State Health Care Marketplaces – US Department of Health and Human Services
Toll-free number: 1-800-318-2596 (also in Spanish)
Provides information on the new insurance law, takes you through the steps of finding insurance, and much more. If you don’t have internet access, the phone number will connect you with your state’s marketplace.
US Department of Health and Human Services – healthcare.gov
Toll-free number: 1-877-696-6775
Can help you find insurance coverage options and learn about the kinds of help you might be able to get
Centers for Medicare & Medicaid Services (CMS) – HHS
Toll-free number: 1-800-633-4227
For more information on COBRA, as well as Medicare, Medicaid, and other government-funded programs. General information on Medicaid can be found at www.medicaid.gov
National Association of Insurance Commissioners (NAIC)
Toll-free number: 1-866-470-6242 (1-866-470-NAIC)
Has information about insurance and insurance companies and how to file a consumer complaint with state insurance departments. For state insurance department phone numbers, visit: www.naic.org/state_web_map.htm
Patient Services Incorporated (PSI)
Toll-free number: 1-800-366-7741 (ask to be connected to the Oncology Intake Department)
Offers financial aid to people with certain types of cancer. Also helps them find and buy health insurance.
*Inclusion on this list does not imply endorsement by the American Cancer Society
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. Accessed at www.dol.gov/ebsa/pdf/cobraemployee.pdf on September 16, 2013.
US Department of Labor, Employee Benefits Security Administration. Continuation of Health Coverage – COBRA. Accessed at www.dol.gov/dol/topic/health-plans/cobra.htm on September 16, 2013.
US Department of Labor, Employee Benefits Security Administration. FAQs For Employers About COBRA Continuation Health Coverage. Accessed at www.dol.gov/ebsa/faqs/faq_compliance_cobra.html on September 16, 2013.
Last Medical Review: January 2, 2014 Last Revised: November 20, 2015