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What is COBRA Insurance?

 

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It is a U.S. federal law allowing employees and their families to continue their group life insurance plan for a limited amount of time after they lose their job or other qualifying events, typically resulting in the loss of coverage.

 

Under COBRA, every eligible individual has the right to maintain the same health insurance coverage they had while employed. Still, they are required to pay the whole premium for the coverage themselves. This means that the employer will no longer be able to cover any portion of the insurance premium, and the individual will be responsible for the whole cost coverage.

 

How Does COBRA Insurance Work?

 

Below is how COBRA insurance works:

 

Qualifying Event: A coverage becomes a qualifying event when a qualifying event occurs. This includes the following:

 

  1. Employment being Terminated
  2. Deduction in working hours due to loss of health insurance eligibility
  3. Divorced from the covered employee
  4. Death of the covered employee
  5. The covered employee becoming eligible for Medicare

 

Notice Period: When a qualifying event occurs, the employer must provide the individual with a notice period explaining their rights to COBRA and the measure they need to take to accept COBRA coverage.

 

Premiums: Employees who opt for COBRA coverage will be solely responsible for paying the total compensation. This includes every portion of the premium which the employer covers with the employee’s share.

 

Coverage Duration: The duration of coverage depends on the following events:

 

  1. In case of termination of employment, the COBRA coverage can last up to 18 months.
  2. For divorce-like qualifying events, COBRA coverage can last up to 36 months.
  3. For disabled individuals, their eligibility extends for 11 months totaling up to 29 months of coverage.

 

How Much is COBRA Insurance?

 

Under COBRA, you are labelled to continue the same health insurance coverage that you had with your employer for up to 18 or 36 months. However, you will be responsible for paying the total premium for that coverage, which includes both share of the compensation and the portion that your employer was previously paying on your behalf.

 

On average, COBRA coverage can cost between $400 and $600 per month for an individual and a family can cost between $1,000 and $1,800 per month. However, costs can vary based on the specific plan and location.

 

Also, See: Cobra Continuation Coverage

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