Did you know that a recent Gallup poll found that 16% of adults will stay at an unwanted job just to retain their health insurance? Getting sick or injured is expensive and the idea of losing coverage in the case they need to access the medical system is causing very real stress among American workers. But there is a government program that can help. 

COBRA extends group health insurance access to employees who have either left their employer or experienced another qualifying event like having their hours reduced below what’s required to qualify for benefits at their employer. If this sounds like you, or if you’re thinking of separating from your employer, you could be eligible to continue your group health insurance through COBRA. You can continue to see your medical providers without interruption and if you or your spouse or dependents experience a serious injury or illness, you’re covered. And while accessing your previous group health insurance plan through COBRA provides you with the same benefits you had while employed, some of the details are different. 

In this post, we’ll discuss the 8 key details employees need to be aware of when accessing their previous group health plan through COBRA. We’ll help you stay eligible for the coverage you need, budget accordingly and maybe even save money on your coverage. 

1. COBRA is not health insurance

While COBRA is often referred to as if it’s a health insurance plan in conversation, it’s actually an acronym for a piece of legislation: the Consolidated Omnibus Budget Reconciliation Act. This legislation outlined rules that ensured employees who leave their employer, or experience another qualifying event, retain access to their employer-sponsored group health plan for a restricted period of time. 

So when you’re applying for COBRA benefits, what you’re doing is applying to access your previous health insurance plan through the COBRA system. And because of this, there are COBRA-specific rules you must follow.

2. Be aware of key COBRA deadlines

In order to retain access to your group health insurance plan through COBRA, you must apply to continue coverage within 60 days of leaving your employer, having your hours reduced or experiencing another qualifying event. As long as you meet this deadline, your new COBRA-accessed insurance coverage will start from the day your previous coverage ended (even if you wait the full 60 days to apply). That means any medical expenses you incurred during that time can be submitted to the health insurance company for payment.

If you waive your right to COBRA coverage, you might not have another chance to elect to participate. Certain people participating in Trade Adjustment Assistance (TAA) programs might be able to revoke their participation waiver. If this sounds like you, check out this website for more details.

Another deadline to be aware of is the date your initial premium payment (and all subsequent payments) are due. You can find this date in your election notice which you should receive from your employer within 14 calendar days of your qualifying event. Your premium payment could be due within 45 days of COBRA benefit enrollment. If you don’t pay your premiums on time, you could lose your COBRA coverage.

3. Know how many months of eligibility you’ll have

You could be eligible for COBRA-extended health insurance coverage for 18 to 36 months, depending on the qualifying event you experienced. If your qualifying event was separating from your employer (either voluntarily or involuntarily) or a reduction in hours, you qualify for 18 months of continued benefits through COBRA. If you became eligible for Medicare less than 18 months prior to the qualifying event, your spouse and dependents can be eligible for COBRA-extended benefits for 36 months.

If you’re originally eligible for 18 months of COBRA benefits, you might be able to extend your coverage period if one of the qualified beneficiaries is disabled (up to 11 additional months), or if a second qualifying event occurs (up to an additional 18 months).

4. Understand how COBRA coverage works for dependents

If you have dependents that were covered under your employer’s group health plan, there are some nuances you should be aware of.

1. They don’t have to retain coverage through COBRA if that’s not what works for you. If COBRA-extended coverage is cost prohibitive for your dependents and there’s another alternative that makes more sense, you can elect not to include them.

2. If a child is born to your family or you adopt a child while participating in COBRA-extended coverage, that child is automatically considered an eligible beneficiary.

3. You should have the exact same benefits as before you experienced the qualifying event.

5. You have to pay 100% of your insurance premiums

The difficult aspect of the COBRA system is that participants must pay for 100% of their health insurance premiums. This could be cost-prohibitive and if it is, there are alternatives to extending your health coverage through COBRA. If you have an HSA, you can use your savings to help pay for your premium cost through COBRA.

6. Your benefits may change if you move out of your coverage area

COBRA is a federal law so your employer must continue to extend your benefits regardless of whether or not you stay within your coverage area. What they can do is offer you alternative benefits. These benefits must be comparable to what you had before you moved. 

7. You can pick which benefits to keep, which can reduce costs

When you submit your enrollment form for COBRA-extended coverage, you can tailor your benefits to whatever works for you. That means you can choose to remove certain family members from coverage or keep everyone, you can choose to drop certain benefits like dental or vision if you want to reduce premium costs, or you can keep everything as-is.

8. There are alternatives to COBRA that may be more affordable

While you have the option to extend your group health insurance plan through COBRA, that doesn’t mean it’s the best decision for your family. Here are some alternatives to COBRA:

1. Group insurance coverage from a spouse’s employer. The loss of employment and loss of insurance coverage are qualifying events for a special enrollment period during which you can enroll for group benefits under a spouse’s employer. Since most employers cover at least part of employees’ premiums and those of their spouses and dependents, it could be a more affordable health insurance option.

2. Purchasing a plan in the private marketplace. There are a wide range of health insurance options available in the private marketplace including High Deductible Health Plans (HDHPs) that typically have the lowest monthly premiums of all the health plans and come with the added bonus of being able to contribute to a Health Savings Account (HSA). As long as your health plan meets the minimum essential coverage standards set by the Affordable Care Act (ACA), you could be eligible to receive a healthcare tax credit.  

3. Medicaid. If you meet certain income requirements, you and/or your spouse or dependents could qualify to receive health insurance through the government assistance program Medicaid. Find out if you qualify on Healthcare.gov.

4. Medicare. To qualify for Medicare you must meet either the age requirement (65), experience a disability, have end-stage renal kidney failure, or suffer from ALS.

Get started with Lively today

Lively is your partner in navigating the often confusing world of health insurance coverage in the U.S. For individuals, we offer a best-in-class Health Savings Accounts, and for businesses we offer a suite of savings and spending accounts that help employees save for the medical care they need, pay for activities that improve their quality of life and even save for retirement, including COBRA and Direct Bill. If you’re interested in one of our world-class products, reach out today.