If you’ve lost your job, you can keep your health insurance through COBRA. But even if it’s an option for you, keep in mind that it’ll cost you more than what you were paying as an employee. And you might not be able to afford it.
Here’s what you need to know about COBRA and if getting it is right for you and your family.
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act, or COBRA, lets you continue your employer-given health insurance on a short-term basis.
The law only applies to health insurance, as the Department of Labor clearly states, “Life insurance and disability benefits are not considered “medical care.” COBRA does not cover plans that provide only life insurance or disability benefits.”
If your former company had 20 employees or more in the year prior to your leave, the employer is generally required to offer the COBRA extension to families. Sometimes it’s called continuation coverage.
While you can get COBRA and your current health plan, your cost won’t be the same. Most employers cover a portion of workers’ health insurance when they’re currently employed.
When you’re no longer employed or don’t meet the minimum requirements for coverage, you’re on the hook for the full cost up to 102% — what you paid and what your employer paid, plus a 2% administrative fee.
How to get COBRA when you leave your job
If you’ve lost your job and you and your family depend on the health insurance you got from that job, you might qualify for COBRA.
Your employer’s group health plan must be covered by COBRA or a qualifying event must occur. You’ll also need to be a qualified beneficiary of that event.
For instance, you’re facing a reduction in hours or you’ve lost your job through no fault of your own. If your spouse died and you got health insurance through their work, you’re a qualified beneficiary entitled to COBRA coverage.
You can contact your employer or former employer about the steps you need to take to ensure your coverage continues as long as you’re able to get it. If you’re entitled to COBRA, you have 60 days to choose whether to elect or deny continuation coverage.
Your COBRA coverage can continue anywhere up to 18 or 36 months, depending on your terms. Some plans might have longer continuation coverage, but those terms are specific to you, your employer, the qualifying event, and the coverage.
Also keep in mind that your coverage could be terminated early for any number of reasons, including if your employer no longer maintains the group health plan.
If you become eligible for Medicare during your COBRA coverage, it could also be canceled before the term is over.
Alternatives to COBRA
While keeping your health plan eliminates one major concern for you and your family, you might find that it’s not in your budget. There’s also a chance you might not qualify for COBRA, which could mean you’re out of a job AND health insurance.
Losing your job is a qualified event that entitles you to gain access to health insurance through a special enrollment period in the Health Insurance Marketplace.
This event allows you to compare your needs to offers with private health insurance offers. Through the Marketplace, you might qualify for a tax credit to lower monthly premiums and out-of-pocket expenses.
The Marketplace lets you see how much your costs will be every month, deductibles, copays, medicine costs, and more.
If you know what your coverage was through your former employer, compare that to what’s offered in the Marketplace to see if you can find something comparable — and possibly for less than what you’d pay on COBRA.
You only get 60 days from losing your coverage to apply for health insurance through the Marketplace to qualify for the special enrollment period.
If you miss the window, you could be without health insurance until the regular enrollment period opens, usually at the end of the year for the upcoming year.
Next Steps for COBRA
Losing health insurance isn’t an option for most people. If you’re unsure if you’re eligible for COBRA, contact your employer or your former employer where you had your group health plan.
Many times, the Human Resource officer has alternative plans laid out for you and can walk you through your next steps.
Remember that COBRA is only temporary. If you start a new job with health insurance or gain coverage through the health insurance Marketplace, you won’t need continuation coverage through COBRA.
But before you take any steps, make sure you review all your options first to find the one that’s right for you and your family.
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