Timing is everything. When it comes to health insurance, sometimes we get caught off guard with a sudden dismissal, reduction in workforce, or an early retirement. For many, Cobra is a useful tool to help bridge the gap between the next job or even Medicare. It is also a tool for spouses when a covered employee goes on Medicare, or a dependent aging out of a parent’s health care plan.

What is Cobra?

Cobra (Consolidated Omnibus Budget Reconciliation Act) is a federal law that may let an employee and/or their dependents keep health insurance coverage in the event the employee experiences a job loss or other qualifying event.  Not all employers are required to offer COBRA to their employees, but employers with more than 20 employees must offer COBRA.  It is generally available for 18 months and in some cases for 36 months. 

Qualifying events can include:

• The employee dies
• The spouse gets divorced from the employee
• A young adult turns 26 and loses their dependent coverage
• A covered employee becomes eligible for Medicare, then his spouse and dependents can receive COBRA

Who pays for COBRA?

Usually, the cost is borne by the beneficiary. Sometimes the employer will subsidize the cost. The premium is paid monthly; the first payment must be made within 45 days of electing coverage.  The cost can vary so it is best to check with your employer or provider.

How long does COBRA last?

Cobra coverage starts on the date of the qualifying event, and the length of coverage depends on the qualifying event.  For job terminations or retirements, the coverage is usually eighteen months.  For other qualifying events it can last as long as thirty-six months.  There are also provisions for disabled individuals and their families.

With whom should I check regarding Cobra availability or coverage?

It is best to start with the employee benefits coordinator as well as the plan administrator.  Keep in mind that the qualifying event needs to be reported to the employer within sixty days of occurring. 

It also pays to do your homework and gather information from both the employer and the plan administrator.  Recent experience with a client’s Cobra coverage uncovered that the benefits person had incomplete knowledge of Cobra. Our client was told her Cobra coverage was ending after eighteen months although she had a letter from the plan administrator saying it was in effect for another eighteen months.  Fast forward to the end of the story, the administrator was correct. The employee benefits’ coordinator had provided inaccurate information to the employee.

For additional information check COBRA Continuation Coverage Questions and Answers | CMS