Understanding COBRA: Your Bridge to Continued Health Insurance

What COBRA Actually Means:

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a federal law passed in 1985. This law gives workers and their families the right to keep their group health insurance coverage for a limited time after certain life events. 

These events include losing your job, reducing your work hours, transitioning between jobs, divorce, or other major changes. Without COBRA, you might face a gap in health coverage during times when you need it most.

Who Qualifies for COBRA Benefits:

You can use COBRA if you worked for a company with 20 or more employees that offers group health insurance. Your spouse and dependent children may also qualify if they were covered under your plan. Common situations that trigger COBRA eligibility include voluntary or involuntary job loss (except for gross misconduct), reduction in work hours, divorce or legal separation, death of the covered employee, or a dependent child losing eligibility under the plan. You must have been enrolled in your employer's health plan when one of these events occurs.

How Long Your Coverage Lasts:

COBRA coverage typically continues for 18 months after you lose your job or have your hours reduced. However, certain situations allow for longer coverage periods. If you become disabled during the first 60 days of COBRA coverage, you might extend it to 29 months. 

Dependents who lose coverage due to divorce, legal separation, or a child aging out of the plan can receive up to 36 months of coverage. The coverage period depends on the specific qualifying event that made you eligible.

The Cost Factor You Should Know:

COBRA lets you keep the same health insurance, but you must pay the full premium yourself. When you were employed, your employer likely paid a large portion of your health insurance costs. Under COBRA, you pay both your share and the employer's share, plus a small administrative fee of up to 2 percent. 

This often makes COBRA expensive compared to your previous employee rate. However, it's usually still cheaper than buying individual health insurance with similar benefits, especially if you have pre-existing conditions.

Making Your Decision Count:

After a qualifying event, your employer must notify the health plan administrator within 30 days. You then have 60 days to decide whether to elect COBRA coverage. Take time to compare COBRA costs with other options like marketplace plans, which might offer subsidies based on your income. 

Consider how much healthcare you'll need during the coverage period. COBRA makes sense if you have ongoing medical treatments, take expensive medications, or want to keep your current doctors. Understanding your options helps you make the best choice for your health and budget.