COBRA Health Insurance Alternatives

COBRA Health Insurance Alternatives

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Cobra insurance information, options and savings


What is COBRA?

Overview

COBRA is a law, the Consolidated Omnibus Budget Reconciliation Act. It protects you and your family if you lose your employer-sponsored health benefits.

You need to meet at least three requirements before you can qualify for COBRA coverage: (i) that your employer is obligated to provide COBRA coverage; (ii) that you are a Qualified Beneficiary; and (iii) that a Qualifying Event has occurred.

Under COBRA, you may be responsible for paying up to 102% of the health insurance premium on your own.

(i) Employer Requirements

Employers are only obligated to offer COBRA coverage if:

  • they offer an employer-sponsored health insurance plan; and
  • they have at least 20 employees

Federal employees do not qualify for COBRA. They are protected under a different law. If you are an employee of the Federal Government, you should contact your personnel office to learn more about continuing coverage of your health insurance benefits.

(ii) Qualified Beneficiaries

You are eligible for COBRA coverage only if you were participating in your employer-sponsored health plan before the Qualifying Event occurred.

COBRA coverage may be offered to employees, an employee’s spouse, or an employee’s dependents. In some cases, this includes retired employees, and the retired employee’s spouse as well as dependents. If you are expecting to have a child or plan on adopting a child during the time you are receiving coverage through COBRA, then that child will also qualify as a beneficiary.

You can choose to accept coverage under COBRA just for yourself or for your family. You can also choose to forego COBRA for yourself and just cover your spouse or dependent children.

(iii) Qualifying Events

The information below outlines the circumstances under which you or a covered dependent may opt to continue your health insurance coverage through COBRA.

Employee:

Employee’s Spouse:

  • If the employee’s work hours are reduced
  • If the employee leaves the job for any reason other than gross misconduct
  • If the employee becomes entitled to Medicare
  • Divorce or legal separation
  • Death of the employee

Dependent Children:

  • If the employee’s work hours are reduced
  • If the employee leaves the job for any reason other than gross misconduct
  • If the child loses dependent child status under the employer sponsored health plan’s rules
  • If the employee becomes entitled to Medicare
  • Divorce or legal separation
  • Death of the employee

Non-Qualifying Events

Notice that the Qualifying Events for COBRA are events that affect your employment status. Events that affect only the type of health insurance plan your employer offers are not Qualifying Events. Thus, if you remain fully employed and your employer reduces, changes or abandons its sponsored health insurance plan, you will not qualify for COBRA.

COBRA Coverage

Your health insurance coverage under COBRA must be identical to the coverage your employer offers its current employees. Generally, this means that you should get the same coverage after the Qualifying Event as you did before.

If your employer reduces coverage to its current employees or cancels its employer sponsored health insurance benefits altogether, then your coverage will be affected. You will be entitled only to the same benefits as current employees have. This means that if your employer cancels its sponsored plan, then you will no longer be entitled to COBRA.


Is COBRA the Right Choice for Me?

Consider COBRA if:

  • You are pregnant or plan to become pregnant within the COBRA coverage period
  • You have a pre-existing medical condition
  • You are taking prescription medications, need to undergo a medical procedure in the near future, or need extensive medical care
  • You have recently been declined for private health insurance

Consider purchasing an individual and family plan if:

  • You are in relatively good health
  • The COBRA option is too expensive
  • You are seeking health insurance coverage beyond the COBRA term (typically 18 months)
  • You are seeking a low-cost short-term plan, such as a 90-day individual health plan

And remember:

You can mix and match your COBRA coverage with individual alternatives. For example:
  • If you have a pre-existing condition, you can choose COBRA coverage for yourself but find a less expensive individual plan for your spouse
  • If your child is about to lose her “Dependent Child” status, consider looking into an individual short-term plan that will provide health insurance coverage while she transitions to college, a new job, or wherever life takes her

Source data according to eHealthInsurance Services: COBRA Insurance – Information, Options & Savings, 2018

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