Erik J. Martin is a Chicago area-based insurance writer whose articles have been featured in AARP The Magazine, The Chicago Tribune, Reader's Digest, USAA Magazine and other publications.
Erik Martin Insurance WriterErik J. Martin is a Chicago area-based insurance writer whose articles have been featured in AARP The Magazine, The Chicago Tribune, Reader's Digest, USAA Magazine and other publications.
Written By Erik Martin Insurance WriterErik J. Martin is a Chicago area-based insurance writer whose articles have been featured in AARP The Magazine, The Chicago Tribune, Reader's Digest, USAA Magazine and other publications.
Erik Martin Insurance WriterErik J. Martin is a Chicago area-based insurance writer whose articles have been featured in AARP The Magazine, The Chicago Tribune, Reader's Digest, USAA Magazine and other publications.
Insurance Writer Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
| Deputy Editor, Insurance
Updated: Aug 23, 2022, 7:00am
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Losing your job can leave you without health insurance. COBRA insurance is one way to keep coverage, but it comes with a hefty cost.
It’s smart to know the pluses and minuses of COBRA health insurance, how much it costs, how to qualify, the deadlines and alternatives to consider.
COBRA is a federal law that stands for “The Consolidated Omnibus Budget Reconciliation Act.” COBRA gives you the right to remain enrolled in a group health insurance plan if it meets COBRA requirements.
This enables qualifying individuals who quit, lose their job or qualify because a special circumstance to temporarily continue their employer-sponsored group health insurance coverage by paying the total health insurance premium themselves (including what was the employer’s portion).
COBRA allows workers who leave employment at a company with 20 or more employees to maintain group health coverage with their former employer for 18 months or longer after they terminate employment. Many states also have “mini-COBRA” laws that apply to companies with fewer than 20 employees.
Employees who have their work hours reduced below the group health insurance’s eligibility threshold can also qualify for up to 18 months of COBRA, according to Bryan Clickener, senior account executive for RSC Insurance Brokerage.
COBRA primarily targets employees who have lost or left their jobs, but it also applies to others who have “qualifying events” that made them lose health insurance.
Qualifying events also affect other family members on health plans, including a spouse or child, including:
COBRA offers a few benefits:
Furthermore, COBRA insurance can be helpful after you lose a job if you or a family member on the plan has a chronic health condition, ongoing health concerns, or necessary treatments in progress that require maintaining predictable coverage and a trusted network of providers.
“COBRA may be your best choice, as well, if you have met your annual deductible and expect to need health care or prescription medications during the rest of the year,” says Cindy George, personal finance editor for GoodRx in Houston.
COBRA also has its drawbacks:
COBRA generally makes the former employee pick up all of the costs for health insurance coverage, which was $7,739 on average for single coverage for an employer-sponsored health plan in 2021, according to the Kaiser Family Foundation.
Using this average expense, it would cost an employee likely $645 per month to continue the employer group health insurance coverage via COBRA.
Family coverage cost was $22,221 on average, which would cost $1,852 monthly without employer help. Those estimates also don’t consider a potential 2% administrative fee.
What you pay depends on your employer’s group health insurance plan and will be explained in your COBRA election notice. You should receive the election notice within 14 days of quitting, losing your job or qualifying because of a special circumstance.
You can qualify for COBRA coverage if:
You typically have at least 60 days from the date you receive a COBRA election notice from your former employer or the date you would lose health care coverage—whichever comes later—to enroll in COBRA.
You have that 60-day window to decide on COBRA. Even if you initially decline COBRA, you can later sign up if it’s within 60 days.
COBRA coverage begins as soon as you become eligible. You can choose COBRA at any point of the eligibility period and the coverage is retroactive whether you choose coverage on day 1 or day 59. That means if you need health care services on day five but don’t sign up until day 50, the COBRA plan will still cover the services because you were eligible for COBRA coverage.
When you qualify for COBRA based on a qualifying life event, you must receive a COBRA election notice within 14 days of your qualifying event. This notice provides details about timelines and rules, including:
“The employee, spouse or family member who qualifies for COBRA must complete the form requesting coverage that comes with the COBRA election notice and make a payment within 60 days, and make a payment within a specific time, usually within 45 days of election for COBRA,” says Michael Arrigo, CEO of No World Borders, a company that specializes in health care data, regulations and economics.
Your COBRA eligibility expires if you do not apply for COBRA by the deadline indicated in your COBRA election notice.
Once COBRA coverage is in place, you are generally eligible to continue coverage for up to 18 months, depending on why you become eligible for COBRA.
COBRA health insurance will terminate if you stop paying your COBRA premiums monthly in full or you reach age 65 and can receive Medicare coverage.
Here’s the longest you can keep COBRA insurance depending on the qualifying event and person.
