COBRA insurance may be a vital lifeline for American workers who experience a qualifying event resulting in loss of coverage. Check out our COBRA FAQs to learn more.
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law that deals with healthcare coverage cancellations due to certain “qualifying events.”
Does my company offer COBRA insurance?
COBRA insurance is required for private-sector businesses with a group health plan employing at least 20 people for more than half of their business days during the previous calendar year. (State and local government-sponsored group health plans may fall under COBRA for employers with fewer than 20 employees.) Plans sponsored by the federal government, churches, and some church-related organizations are exempt from COBRA.
What is a qualifying event?
A qualifying event that typically results in loss of coverage includes:
- Job loss for reasons other than gross misconduct
- Reduction in work hours
- Divorce or legal separation from the covered employee
- Covered employee becomes eligible for Medicare
- Death of the covered employee
Am I eligible for COBRA?
If you were part of your employer’s health plan and had a qualifying event, you can enroll in COBRA coverage.
Do I have to elect COBRA?
No. You may shop for other coverage, including on the Affordable Care Act (ACA) health insurance marketplace (healthcare.gov).
What benefits can continue?
Under COBRA, you can receive the same health plan coverage available to active employees and their families. COBRA plans are often the same coverage held before the qualifying event.
Can I continue some plans but drop others?
If you (and any dependents) had coverage under specific plans (health, vision, dental) before the qualifying event, you can choose which to keep and which to drop. You can choose to keep only health, only vision, only dental, or any combination.
Can I choose who keeps coverage and who doesn’t?
You can choose who remains covered. But remember, the covered individuals must have been on the plan before the qualifying event. You generally cannot add new participants (with some exceptions, like when a child joins the family).
If I decline COBRA coverage, can I change my mind and enroll later?
You can initially decline, then enroll later if you are still within your election period. You will revoke the original coverage waiver, and your coverage will begin at that time.
How long will COBRA continue my coverage?
You can have COBRA coverage for up to 18 months. Under certain circumstances, some beneficiaries qualify for an 18-month extension, to a total of 36 months.
How much does COBRA insurance cost?
COBRA premiums include both the employer’s share and the employee’s share of the insurance premiums. A 2% administrative fee is often added. The total premium cost cannot exceed 102 percent of the current total for active employees with the same coverage.
Who pays COBRA premiums?
You and/or your dependents pay for COBRA continuation coverage. (For more information on how to make online COBRA payments, check out our handy quick-start guide.)
What happens to my health insurance when my company closes?
Were you on a health plan with a company that no longer exists? If so, COBRA coverage may no longer be an option. If you are in a labor union with a medical coverage agreement, you may still have coverage even if your company has closed.
DataPath Administrative Services has provided Arkansas employers with comprehensive third-party employee benefits administration and compliance services since 1996. Please enter your email (above right) to receive notifications about new blog articles as they are published.