Deserving or not, COBRA insurance has a reputation for being hard to decipher. Even its name, Consolidated Omnibus Budget Reconciliation Act, is complicated. 

But acronyms and fine print aside, the purpose of COBRA health insurance is straightforward: temporary continuation of a terminated employee's group coverage for a limited amount of time (usually 18 months). Generally, COBRA is applicable to businesses with 20 or more employees. But, there are some exceptions, so check with your former employer.

COBRA Qualifying Events

Qualifying events are certain events that would cause an individual to lose health coverage. The following are the two events that make an employee with a group plan eligible for COBRA coverage:

  • Voluntary or involuntary termination for reasons other than gross misconduct
  • Reduction in the number of hours of employment

Your former employer is responsible for notifying you that COBRA1 continuation coverage is available to you. Normally, you’ll receive a notice no later than 14 days following either of these COBRA qualifying events. You’ll have 60 days to decide whether to sign up.

Frequently Asked Questions

What Health Plans Are Covered Under COBRA?

The medical, dental, and vision plans offered by your employer are all included under COBRA. However, you may continue only those plans in which you were enrolled.

For example, if you were enrolled in a PPO medical plan and vision plan, you may continue either or both of those two plans. But, you would not be eligible to change to an HMO medical plan, and you would not be eligible to add in a dental plan.

Your employer is not required to offer continuation of coverage for life insurance, disability insurance, retirement plans or vacation plans.

Who Pays for COBRA Health Coverage?

You (the former employee) pay for coverage. When you’re employed, your employer often pays a portion of the group health coverage premium, and you pay the rest. However, under COBRA you are now responsible for the full premium plus an administrative fee.

COBRA premiums can be expensive, depending on the type of plan your employer offered. 

What Might Cause COBRA Coverage to Terminate Early?

Your COBRA coverage can be terminated early if:

  • You do not pay your premiums on a timely basis
  • Your employer ceases to maintain any group health plan
  • You obtain coverage with another employer
  • A covered person becomes eligible for Medicare benefits

1 Read more about COBRA health coverage from the United States Department of Labor at COBRA Continuation Coverage. Personal insurance is not the same as COBRA, so review your COBRA information carefully. Your time to elect COBRA is limited by law. Failure to elect and exhaust COBRA will eliminate HIPAA eligibility. You may have additional rights under state law.