What is COBRA?

COBRA is the Consolidated Ombinus Budget Reconciliation Act that has been around since 1986. Since that’s quite a mouthful, let’s stick to the acronym: COBRA. It’s purpose is to give employees and their families who lose medical, dental, and vision coverage, the right to continue benefits provided by that employer for limited periods of time under a number of circumstances (i.e. voluntary/involuntary job loss, reduction of hours, divorce or legal separation, etc.). Qualified beneficiaries (QBs) of COBRA are the employees themselves and any dependents that were covered under the employee’s plan. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.

Does my employer need to offer COBRA?

No, not all employers need to offer COBRA coverage. Only employers with over 20 employees are mandated to offer COBRA.

Who qualifies for COBRA?

Please see below for different reasons that someone would qualify for COBRA.

Termination 

When an employee voluntarily or involuntarily loses their job, other than gross misconduct

Loss of hours 

When an employee’s hours are reduced and they are no longer eligible for the insurance provided by their job

Medicare

When an employee switches from their current insurance plan under their employer to Medicare, any dependents that are eligible must be offered COBRA

Divorce

When an employee divorces their spouse and removed them from their plan, COBRA must be offered to the spouse

Death

When an employee passes away, all currently covered dependents must be offered COBRA

Aging out 

When currently covered dependent children turn 26, they must be removed from their parents’ plan and offered COBRA

Incarceration

When an employee is incarcerated, all currently covered dependents must be offered COBRA

COBRA participants must be included in Open Enrollment

Qualified beneficiaries must be sent the same Open Enrollment materials that active participants are given to change plans, add dependents, add additional coverage, or waive.

COBRA premiums are the full premiums (sometimes + an administration fee)

When an employer contributes to a plan, employees may receive that plan at a much lower cost. When COBRA is offered to a QB, the QB will have to pay the full month’s premium (no employer contribution), and sometimes an additional administrative fee at 2% depending on the employer.

QBs do not have to elect COBRA

COBRA is not mandatory. If the person being offered COBRA does not wish to continue their coverage under that employer, they do not need to. They can also choose to enroll until they find a new insurance plan.

QBs can cancel COBRA at any time

COBRA can be canceled at any time, as it is designed for temporary purposes.