As often as people mention the word COBRA insurance, it is rare that people can actually explain how does COBRA insurance work. And understanding exactly how does COBRA insurance is extremely important for anyone who has recently quit, lost, or retired from their job as well as anyone who is going through a divorce or outgrowing their parent’s insurance. COBRA insurance is a good alternative for many people to ensure that they keep health insurance and do not have to go without medical care or experience a lapse in medical care. This can be especially important for anyone with a preexisting condition or with serious ongoing health needs.
COBRA insurance eligibility depends on many things and differs depending on why health insurance is being lost. If health insurance is being lost because the covered employee has lost their job, quit their job, or retired from their job then for in most cases, the employee and their family will be covered as long as at least 20 people (or their part time equivalents) were covered under the employer sponsored health insurance plan and the employee didn’t lose their job due to gross misconduct. Gross misconduct refers to being fired from a job for a serious incident such as theft or sexual harassment. Learn more about COBRA insurance eligibility.
If you are a family member who is losing their health insurance coverage because you are getting divorced from the covered employee or have outgrown coverage, you can get COBRA insurance or up to 36 months in most cases even if the covered employee hasn’t lost their job. Since you were covered while married or as a dependent, the COBRA insurance law allows you to keep coverage as long as the plan covered at least 20 full time employees. Normally this COBRA coverage lasts between 18-36 months.
COBRA insurance is unfortunately very expensive for most people, especially if they just lost their job. Under the COBRA insurance law, you must pay 102% of the entire premium. This means that you must pay both what you contributed to your health insurance plan as well as what the employer paid for your health insurance plan. For most people employers cover anywhere between 50%-90% of the cost.
The coverage under COBRA insurance is the exact same as it was while you were covered under the employer’s group health insurance plan. COBRA is simply an extension of the plan you had as opposed to a new plan. That means that you will have all the same doctors, co-payments, deductibles, emergency room coverage, etc.
Signing up for COBRA insurance is actually extremely easy. Your employer should provide a COBRA insurance election form in which you will denote who you want to sign up for COBRA insurance. You must turn this form within 60 days with a full payment of the premium to be able to use COBRA insurance coverage.