COBRA: Continuing Health Insurance After Job Loss

Who Qualifies:

• Employees who lose their job (except for gross misconduct) or have hours reduced
• Spouses/dependents when the employee dies, divorces, or becomes Medicare-eligible
• Dependents who age out of the plan

Key Details:

• 18 months coverage for job loss/hour reduction
• 36 months for death, divorce, or Medicare eligibility
• You pay 100% of the premium PLUS up to 2% admin fee
• This is often 3-5x what you paid as an employee

Qualifying Events:

• Job termination (voluntary or involuntary, except gross misconduct)
• Reduction in work hours making you ineligible
• Employee's death
• Divorce or legal separation
• Employee becoming eligible for Medicare
• Dependent child losing eligibility

Coverage Periods:

• 18 months: Job loss or reduced hours
• 29 months: Job loss with disability determination
• 36 months: Death, divorce, Medicare eligibility, or dependent aging out

Coverage is Identical:

• Same benefits, networks, and prescription coverage
• Same deductibles and out-of-pocket maximums
• No medical underwriting required

Family Coverage:

• Each qualified beneficiary can elect COBRA independently
• Spouse and children don't have to elect just because employee does
• Each person gets their own maximum coverage period

Premium Payments:

• First payment due within 45 days of election
• Subsequent payments typically due monthly
• 30-day grace period for late payments
• Coverage terminates if payments are more than 30 days late

When COBRA Ends:

• Maximum coverage period expires
• You fail to pay premiums
• Your former employer stops providing group health coverage to any employee
• You become covered under another group health plan (with exceptions for pre-existing condition exclusions)
• You become entitled to Medicare

Healthcare.gov Marketplace:

• Losing coverage is a qualifying event for special enrollment
• You may be eligible for premium tax credits (subsidies)
• Coverage can start the first day of the month after you lose job-based coverage

Spouse's Employer Plan:

• Job loss typically qualifies you for special enrollment
• Often much less expensive than COBRA

Medicaid:

• If your income drops significantly after job loss
• Expanded Medicaid available in many states
• No premiums for most beneficiaries

Short-Term Health Insurance:

• Much cheaper than COBRA but limited benefits
• Doesn't cover pre-existing conditions
• Maximum coverage periods (varies by state)

When COBRA Makes Sense:

• You have ongoing medical treatment and want to keep your doctors
• You've met your deductible and have expensive treatments planned
• You expect to get a new job with benefits quickly
• Other options aren't available or don't work for your situation

When to Skip COBRA:

• Marketplace plans are significantly cheaper
• You qualify for Medicaid
• You can get coverage through a spouse's plan
• You're healthy and comfortable with short-term coverage

Strategic Considerations:

• Compare total costs, not just premiums
• Consider your current health needs and doctor relationships
• Check if your medications are covered under alternative plans
• Remember: you can't change your mind once you decline COBRA