Your Employer-Based Health Insurance
What is COBRA? COBRA is a federal law
that requires employers to allow employees and
dependents losing health insurance to
stay on the employer’s plan.
Who is covered by the law? Almost all
employers who provide health insurance to their
The federal government and its employees;
Churches and most religious affiliated employers such
as church-owned hospitals; and
Employers with less than 20 employees.
NOTE: Several states have passed laws that provide
coverage to employer groups of less than 20 employees.
They include: Arkansas,
California, Colorado, Connecticut, Florida, Georgia,
Illinois, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland, Massachusetts, Minnesota,
Nebraska, Nevada, New Hampshire, New Jersey, New
Mexico, New York, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode
Island, South Carolina,
South Dakota, Tennessee, Texas, Utah, Vermont, West
Virginia, Wisconsin, and
Wyoming. However, they don’t all match the federal
law completely, so check your
own state’s law if you work for a small employer.
How does the law work? If you would lose
your employer’s health insurance because you
terminate employment or your hours are
reduced so that you’re no longer eligible, COBRA allows
you to stay on the health insurance plan.
Your dependents also have a right to
continue their coverage if you die or if your spouse divorces
you or if your children are no longer
eligible to be insured due to their age.
The only employees who cannot continue
their coverage under COBRA are those who are
terminated for “gross misconduct,”
which usually means due to a violation of law such as theft or
How long can I stay on my employer’s
If you lose coverage due to termination or reduction in
hours, you can stay on the plan for 18
If you are disabled when your coverage ends, you may
stay on the plan for 29 months,
which is how long it takes to get Medicare, provided
you meet the requirements of that
If you are the spouse of an employee and lose coverage
due to the death of the employee or
due to divorce, you can continue coverage for 36
If you are the dependent child of the employee and you
lose coverage due to passing the
age limit for dependent children, you can continue the
coverage for 36 months.
Can that time ever be cut short? Yes, you
will lose your COBRA continuation rights before the
time limit expires if:
You fail to make a premium payment by the due date and
Your employer stops all health insurance plans for all
employees of all of their companies. If,
for example, your former employer goes broke and lays
off everyone, then there is no
coverage left for you to continue.
You become eligible for another group health insurance
plan from another employer that
covers all of your pre-existing conditions.
You become eligible for Medicare.
What are the benefits of the COBRA plan?
COBRA is only a law, not a plan. You must be
allowed to stay on exactly the same
coverage you had when you were an active employee. If your
employer allows employees to switch plans
once a year in an open enrollment, you must be given
the same privilege. This also means if
your employer changes plans, your plan changes too.
Does this only apply to health insurance?
It applies to all types of health insurance plus all
health-related plans, such as dental,
vision, or prescription drug benefits. It does NOT allow
continuation of group life insurance or
group long term disability coverage. See the plan document
for those plans for any continuation they
Does my whole family have to take the
Continuation? No, each insured member of your family
has their own COBRA rights and may decide
to continue the coverage or not.
How much does it cost? This is the big
problem with COBRA; you must pay the entire cost of
the insurance including what the employer
used to pay on your behalf, what you used to pay out of
payroll deduction, plus a 2%
administrative fee. For a single individual, this can be $150
per month, and much more for a family.
Is there any help with paying those
premiums? If you qualify for Medicaid in your state, most
states have a plan that will pay the
insurance premiums for you. If you are also dealing with
HIV/AIDS, many states have set aside some
Ryan White funds to pay health insurance premiums.
Some doctors and hospitals have been
known to pay the premiums so their bills will continue to
be paid, but it’s not common.
How do I get on the COBRA continuation?
If you are losing your employer’s health insurance,
the employer is required to mail you a
notice that tells you about COBRA and how much the plan
will cost. The employer must also give
you the chance to continue the coverage, usually with an
You have 60 days from receiving the
notice to accept the coverage. You will owe premiums all the
way back to the date you lost coverage
but you will have an additional 45 days to pay it from the
date you notify the employer of your
intention to continue.
My health insurance is very important to
me. What should I watch out for when continuing
it under COBRA?
Don’t wait for the mailing from your employer. Ask
for it when your coverage is about to
stop. Some employers may insist on mailing it to you,
but you will know when to expect it
and can follow up if it doesn’t arrive.
Don’t refuse the COBRA extension even if you know you
won’t take it. Let the 60 day period
expire. That way, if there’s a medical emergency
during that 60 days, you can take the
COBRA and have the coverage.
Pay your premiums on time! If you are ever late, they
can cancel you and they do not have
to reinstate your coverage. When possible stay one
month ahead so you have time to
correct any mix-ups or lost payments.
Make sure you keep a record of everything you send and
everyone you talk to about your
COBRA continuation. When possible, send materials
Return Receipt Requested or deliver
the documents and payments in person and get a written
Be very careful if your employer hires a COBRA
administrator to handle the COBRA
Continuation. These companies operate with the goal of
getting everyone off COBRA that
they can legally get off.
If you’re disabled when your coverage stops, learn
the rules for extending the COBRA to
Medicare. They are complicated and most employers
don’t understand them.
Jacques Chambers is a benefits counselor
in private practice. He has over thirty years in benefits
and advocacy. You may contact him through
his website at http://www.helpwithbenefits.com