WHAT IS COBRA: Definition, How It Works & Benefit

What Is COBRA Insurance
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The Consolidated Omnibus Budget Reconciliation Act (COBRA) permits employees to continue receiving the advantages of health insurance coverage for themselves and any qualifying dependents even after losing their job or having their work hours reduced.

COBRA insurance may provide you with temporary health coverage if you lose your job or are otherwise eligible.

What Is COBRA? 

When an employee loses their job or has their work hours reduced, they have the option to continue their health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act. If an employer has 20 or more full-time equivalent employees, most states mandate that they offer COBRA coverage. The length of COBRA’s health insurance coverage varies depending on the situation and is either 18 or 36 months.

The cost of COBRA insurance is usually high because the newly unemployed person is responsible for covering the entire premium (employers typically pay a sizable portion of employee healthcare premiums). You can continue to use your employee health plan despite no longer being employed by your former employer. 

Individuals may continue on their health plans for a brief period in certain circumstances, such as job loss, etc. But not everybody qualifies for these advantages.

What Is COBRA Insurance?

In the US, large employers, those with 50 or more full-time workers, are required to provide health insurance to their qualified employees. They can do this by paying a portion of the insurance premiums. 

When an employee is no longer eligible for the employer’s health insurance benefits, which can happen for several reasons, the employer may stop paying the employee’s insurance premium contributions.  

Then, under COBRA, the employee and their dependents can keep their insurance coverage for a predetermined period if they are willing to pay for it themselves. 

The option to continue their health insurance at group rates under this insurance is available to former spouses, children under the age of 18, and spouses of former employees. If they choose not to, their insurance company will cancel their coverage. However, because the employer won’t be covering the full cost of the premiums, these people will probably have to pay more for health insurance through COBRA than they did when they were employees.

To put it simply, “having COBRA insurance” means that you and your covered family members will continue to use the group insurance offered by your employer after a qualifying life event. 

The term “qualifying life events” refers to alterations in your situation that might make you or a member of your family ineligible for protection under a group health insurance plan offered by your employer. 

Examples include the insured employee quitting their job or reaching Medicare eligibility at age 65. In addition, it might refer to the insured worker’s divorce or demise.

How Does COBRA Insurance Work? 

If your previous employer offered group medical insurance and had more than 20 employees, you may be eligible to apply for COBRA. People who obtain employer-based insurance from businesses with fewer than 20 employees, the federal government, churches, or other related organizations are not eligible for this insurance coverage.

If you enroll in your job’s health plan, and the workplace has at least 20 employees, then you will be eligible for its insurance coverage. You are also eligible if your health plan is still active, or a qualifying event caused you to lose coverage. The following are also eligible for COBRA coverage; your spouse, former spouses, and dependent children. 

You can get information on COBRA coverage from either your employer, or your insurance provider.  When you first enroll, your insurance provider must include information about COBRA rights in your plan documents. If you choose to continue receiving health insurance under COBRA, you have up to 60 days to make your decision. Your health insurance will expire on the day that coverage under your employer’s plan expires if you don’t elect to continue it.

If you decide to continue your employer’s plan coverage, your coverage will start the day after it expires. It will offer all of the benefits that you enjoyed from your employer’s group plan. You can continue to follow the terms of the current plan and see the same medical professionals and other service providers.

The COBRA coverage period can last for either 18 or 36 months. Your response will depend on the type of qualifying event that made you eligible for this insurance. 

If you don’t pay your insurance premiums or other associated costs, your COBRA insurance terminates early. If you land a job that provides health insurance before it expires, the insurance might also cancel your plan. Contact your insurance company for further inquiries.

What Are COBRA Benefits?

  • You can continue to use the same plan as you would if you were still an employee thanks to COBRA.
  • Children or spouses, including ex-spouses, are eligible.
  • Until you are eligible for another health plan, this insurance can help fill the gap in your coverage.
  • If you don’t immediately enroll in COBRA, coverage is retroactive and you have up to 60 days to accept.
  • You can continue to use the same claim-filing procedures, physicians, and pharmacies.
  • If you commute between homes or travel outside of your state frequently, employer-sponsored health plans may offer wider networks than non-group health plans.

What Is COBRA Coverage? 

If you wish to enroll in COBRA, you must give your health plan administrator 60 days’ notice. You and every covered family member will then need to be aware of your insurance rights by the plan administrator. After that, each adult in the family has 60 days to decide whether to accept or reject COBRA coverage. Your insurance notice will include the following specifics about the requirements and due dates:

  • How to apply for this insurance
  • When must you decide whether to enroll in COBRA?
  • The best way to alert the plan administrator
  • The start date for COBRA coverage
  • The longest possible period of coverage
  • Your recurring monthly payment due date
  • Conditions that could result in early termination of your coverage 

No payment is necessary for your election form, but you might need to make the initial payment within 45 days of turning in the form. If you miss that window, you run the risk of losing your insurance rights. To pay other premiums, you have thirty days of grace. If you make late payments, the insurer might cancel your insurance. However, if you pay within the grace period, the coverage might be reinstated. 

People typically have a right to 18 months of federal COBRA continuation coverage following a layoff or a reduction in the number of scheduled work hours. Your spouse and any dependent children may be covered for up to 36 months at a time.  

As soon as a qualifying event, such as a job loss, occurs, coverage starts. Once you have paid the premiums for that duration, coverage is retroactive to that date, even if you wait a while to enroll. You can discontinue your COBRA coverage at any time if you so choose.

What Are 3 facts About A COBRA?

  • This insurance typically only applies to businesses with 20 or more employees. However, some states mandate that you can keep your coverage for a set period if your employer has fewer than 20 employees.
  • The typical COBRA coverage period is 18 months (though in some cases, it may be 36 months). If you discover your coverage has ended and you didn’t receive a notice, or if you get divorced, inquire with the employer’s benefits administrator or group health plan about your COBRA rights.
  • After your employment ends or you no longer qualify for coverage as a dependent of the covered employee, COBRA, a federal law, may allow you to maintain your employer-provided group health plan coverage for a short period. You also refer to this as “continuation coverage.”

How Long Does COBRA Last?

COBRA is only temporary. The circumstances that qualified you will determine how long your COBRA extension will last. You can usually continue on COBRA for up to 18 months as long as you can afford your premiums. If something else occurs in your life, you might be eligible for even more time.

If you were disabled at the time of eligibility or within the first 60 days after you qualified for COBRA, you might be able to extend your coverage for an additional 11 months. You may be eligible for coverage for up to 36 months if you enroll in Medicare within 18 months of your incident. 

How Do You Set Up A COBRA? 

Your employer or the health insurance administrator must inform you of your rights to enroll in COBRA. After that, you have at least 60 days to decide whether to enroll. You must let the plan sponsor know if you think your divorce, legal separation, or loss of dependent or child status qualifies you. Even if the primary employee decides not to use COBRA, you can still choose to do so.

What Does COBRA Coverage Include?

You are entitled to the same benefits under this insurance that you had under your employer’s health plan. Supplemental insurance like disability, life, hospital care, and other kinds of voluntary coverage are not covered by COBRA.

Is COBRA Coverage The Same as My Insurance?

In most cases, the COBRA coverage you receive will be identical to the coverage you had as an employee. This is useful if you want to keep seeing the same doctors and taking advantage of the same health plan benefits. You simply keep your employer-sponsored health plan, just as you did before you lost it. COBRA enables you to keep your current health insurance plan if you lose your job involuntarily, without your fault, or as a result of a decrease in hours worked. 

How Does COBRA Work If I Get A New Job?

If you were covered by your former employer’s group health insurance and they had more than 20 employees, you would be entitled to keep it for 18 months after you left your employment. You can continue to make use of COBRA as long as you don’t sign up for a second insurance plan or begin receiving benefits from your new employer’s health insurance.

What Is The Difference between COBRA and Medicare?

It is possible to have both Medicare and COBRA if you first have Medicare and are then approved for COBRA. The priority of Medicare over COBRA should always be kept in mind. Since Medicare is your primary insurance and dropping it would be the equivalent of having no insurance at all, you should not do so. However, your COBRA coverage might end if you first have it and then become eligible for Medicare. 

Your main insurance is Medicare, and your secondary insurance is COBRA. Medicare should remain in place, as it covers the majority of your medical expenses.


If you lose your employer-sponsored benefits, COBRA is a practical way to keep your health insurance, and it’s sometimes the best choice. The plan might not always be the best one for a person’s or a family’s needs, and the cost is frequently high.


What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees to continue receiving the advantages of health insurance coverage for themselves and any qualifying dependents even after losing their job or having their work hours reduced.

How Do You Set Up A COBRA? 

Your employer or health insurance administrator must inform you of your rights to enroll in COBRA. After that, you have at least 60 days to decide whether to enroll

How Long Does COBRA Last?

The circumstances that qualified you will determine how long your COBRA extension will last. You can usually continue for up to 18 months as long as you can afford your premiums

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