Individual and Family

What is COBRA Health Insurance?

Updated on November 18, 2019

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COBRA, or the Consolidated Omnibus Budget Reconciliation Act, allows those who have quit or lost their job to keep the coverage they had under their employer for 18 months. However, with COBRA you have to front the entire bill for your health insurance instead of splitting the cost with your employer.

How does COBRA work?

If your employer offers COBRA, you may be eligible to keep your insurance if you lose your job (except in cases of gross misconduct) or lose your health insurance benefits due to a reduction in work hours.
COBRA benefits also extend to spouses and any dependents in the case of divorce or death of a covered employee. Children who are born to, adopted, or placed for adoption with a covered employee while they are on COBRA coverage are also likely to be entitled to COBRA coverage.

How do I qualify for COBRA?

You may qualify for COBRA coverage in the event of

  • Voluntary or involuntary job loss – except in the case of gross misconduct
  • A decrease in the number of work hours resulting in the loss of health insurance benefits

In addition of the above two events, spouses of COBRA covered employees may qualify for COBRA coverage if

  • Their spouse has aged into Medicare
  • They divorce or legally separate from the covered employee
  • The covered employee dies

In addition to the above events, dependent children may be entitled to COBRA if they age out of dependent child status (in most cases, this means turning 26).

What does COBRA cost?

Percentage of Premium Paid by Employee

May of those who qualify for COBRA are often shocked to know how much it costs. Those who choose to opt into COBRA have to pay the percentage of their health insurance premium that they were previously paying for their employer sponsored coverage, their employer’s share of the cost, and up to a 2% in administrative fees.
According to a 2018 survey conducted by The Kaiser Family Foundation (KFF), on average employees paid 18% of their health insurance premium for single coverage. According to the same survey workers paid 29% of their health insurance premium for family coverage in 2018.

Source: KKF Employer Health Benefits Survey 2018
With COBRA, an enrollee would go from paying around 18%-29% of their health insurance premiums to 100-102% depending on administrative fees.
According to the KFF, the average total cost of an annual premium for an employer sponsored plan for single coverage was $6,368 and $19,616 for an employer sponsored family plan in 2018. Note that these are the average total annual premium, not the employer or employee contribution.

Do I have any alternative options to COBRA?

Qualifying Life Events that Trigger Special Enrollment Periods

If you decide that you do not want to opt into COBRA coverage, you have other coverage options as losing your insurance through your job doesn’t just trigger COBRA eligibility.
Quitting or losing your employer sponsored insurance is a qualifying life event that also triggers a special enrollment period which allows you to enroll in a health insurance plan outside of the open enrollment period.

If you decide that you would rather enroll in a different major medical plan, you can do so during this special enrollment period. eHealth is a great place to shop for new coverage as eHealth is the first and largest online health insurance brokerage.
If you expect to get another job with health insurance or would prefer to wait until open enrollment to choose to enroll in a major medical plan, in most states you can purchase short-term health insurance plans that will help fill any gaps you have in health insurance coverage.
Short-term plan premiums generally cost much less than major medical plans but tend to have much less comprehensive coverage. They still do supply some coverage and having a short-term plan is much better than going without any coverage at all.
Short-term plans are a great choice for those who’ve opted into COBRA, decided they didn’t like it or that it was too expensive, and decided to end their coverage early since ending COBRA early doesn’t trigger a special enrollment period.
eHealth also offers a wide selection of short-term health insurance plans to choose from – along with other health insurance products that may help supplement a short-term insurance plan – that may be right for you.
 

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