When you leave a job, are laid off, or get a reduction of hours worked, losing health insurance is a scary thought. However, there is an opportunity to continue group health benefits for limited periods of time thanks to COBRA.
What is COBRA and how does it protect me?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act, and part of its purpose is to secure employer-provided health insurance for workers who lose eligibility due to voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.
However, COBRA only ensures access to the group health care plan—you’ll be responsible to cover all premiums, including any contributions formerly made by your employer. There may also be a 2% administrative fee.
COBRA coverage only lasts up to 18 months, and it may not be cheaper than purchasing an individual or family plan through a Health Insurance Marketplace or other third-party provider. Before opting in, explore long-term health care options.
Who qualifies for COBRA?
If you qualify for COBRA, the health insurance administrator used by your employer will notify you.
Generally, if you lost eligibility to employer-provided health insurance due to job loss or change, life events, or reduced hours, you qualify for COBRA. You must have been enrolled in the health coverage before losing eligibility, though, and the coverage must still be available to other employees.
How do I apply for COBRA coverage?
You must respond to the notice sent to you by the health care provider by the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later.
When does COBRA coverage expire?
COBRA covers you and your family for up to 18 months, unless:
- Your former employer decides to discontinue a health plan altogether
- You become eligible for health coverage with a new employer
- You become eligible for Medicare
- You fail to make payments
Your coverage can extend to 29 months, but only if you become disabled within 60 days of enrolling in COBRA coverage. Otherwise, the limit is 18 months.
What happens once COBRA coverage expires?
Long-term care insurance doesn’t come with COBRA, since coverage only lasts 18 months, so you may want to purchase an individual LTC plan. See Long-Term Care Insurance.
Does my state have additional COBRA coverage?
Maybe—your state may offer “mini-COBRA” laws that determine any eligibility requirements past the federal mandate. Check with your state’s insurance department or your employer’s HR department for more info.
Are there tax breaks for using COBRA coverage?
COBRA coverage is not incentivized for tax breaks, but like other out-of-pocket insurance premiums, you may be able to deduct COBRA premiums if you itemize deductions. See Deducting Medical Expenses.