COBRA (the acronym for the federal mouthful “Consolidated Omnibus Budget Reconciliation Act”) is your chance to continue coverage if you lose health insurance.
You may lose your health benefits if you quit your job, your company lays you off, your hours are reduced to part time, your employer files for Chapter 11 bankruptcy, you are the dependent and the primary policy holder spouse or parent dies, you get divorced, or you are too old to be covered under your parent’s health insurance. You may also want COBRA if you change jobs and your new employer’s health insurance doesn’t start right away.
COBRA temporarily extends the health plan you had when you were employed. You can usually keep COBRA for up to 18 months. If your dependents lose coverage because of a family change, such as divorce, they can keep COBRA for up to 36 months. Before COBRA (enacted in 1986), when employees left their companies, they and their families lost health insurance right away.
You will have to pay the entire cost of your health plan. Your former employer will no longer pay any of your insurance. Keep this in mind, if you’re think of signing up for COBRA; employers tend to pay a significant portion of your health insurance. So, COBRA will be expensive.
You have another option. Let’s say you lose your job and have trouble finding a new one. You may want to compare COBRA to insurance in the federal or state marketplaces. You can get marketplace insurance under the Affordable Care Act (ACA) if you lose your job, even after the marketplace enrollment deadline – Feb. 15 of each year. Your lower income may even qualify you for financial aid under the marketplace.
You have 45 days from the date you chose COBRA to pay your first premium bill. The bill will cover the period all the way back to the date you lost coverage in the first place. No one will send you a bill; you are responsible for paying attention to due dates.
Your COBRA will stop when you become covered under another health plan, are eligible for Medicare, or the maximum enrollment period ends. It will also end if you stop paying premiums, but you will have a 30-day grace period after your bill is due to pay.
COBRA will also end if your former employer stops providing health insurance to all employees. Only a very small percentage of employers have dropped coverage since the ACA became law.
June 15, 2015
Christopher Nystuen, MD, MBA