If you lost your job, continuing your group health coverage may be a challenge. Whether you were terminated, resigned or have been cut down to part-time, you should know your COBRA rights.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.
COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice.
COBRA eligibility rules
If your company has 20 or more employees enrolled in a group plan who have worked at least half the year, you are eligible for COBRA coverage. This includes full and part-time workers.
One of several types of “qualifying events” must occur to make you eligible for COBRA, as the chart below outlines. You then are eligible to buy COBRA for the maximum coverage period as determined by your beneficiary status and the qualifying event.
Additionally, your spouse or any of your children may enroll in COBRA regardless of your own COBRA-election decision, assuming they were insured under your employer’s group plan. Even if you forgo COBRA, any of your qualified family members may elect to continue their health insurance benefits under your former employer’s plan. According to the Insurance Information Institute (III), qualifying events may include:
- You leave a company and become unemployed or self-employed.
- You are a widow or widower or child of an employee who died.
- You are the divorced spouse or child of an employee who has left the company.
- You are the child of an employee and you have reached the plan’s cut-off age
The Clock is running on your COBRA decision.
Employers must notify plan administrators of a qualifying event within 30 days after an employee’s death, termination, reduced hours of employment or entitlement to Medicare.
A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child’s ceasing to be covered as a dependent under plan rules.
Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice that a qualifying event has occurred. The individual then has 60 days to decide whether to elect COBRA continuation coverage. The person has 45 days after electing coverage to pay the initial premium.