COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which is a health insurance program that allows employees to continue to receive healthcare benefits even after losing their job or other extenuating circumstances. COBRA can be expensive, but it may also help you retain your benefits while searching for a new job.
Through COBRA, you can continue to receive your employer-provided healthcare benefits even after losing employment due to being let go, a death in the family, divorce, transitioning from one job to the next and so on for a temporary time. The coverage under COBRA health insurance is not a permanent solution, but it is meant to assist those who need it for 18 or 36 months.
What is COBRA Insurance?
COBRA insurance coverage is a temporary benefit put into legislation by the federal government in cases where an employee may need health insurance to extend past their voluntary or involuntary termination of employment.
It is not meant to be a permanent solution, but it can act as an aid to those who are eligible, which normally refers to employees previously receiving healthcare benefits from their employer but need to continue receiving those benefits after leaving that employer. They can apply for COBRA health insurance to bridge the gap between jobs or if they encounter life circumstances such as death or divorce or some other occurrence that would deem them eligible.
How to Get COBRA Health Insurance
While COBRA itself is an act meant to amend previous laws regarding healthcare and employee benefits under certain employers, COBRA health insurance is a blanket term used to describe this form of assistance. Depending on the scenario and the applicant’s (former) employer, the term of COBRA insurance coverage can last either 18 months or 36 months.
People who qualify to apply for COBRA coverage include employees who:
- have left their jobs voluntarily or involuntarily
- have experienced reduced hours that no longer qualify them for employer-supplied health insurance coverage
- have suffered the death of a covered spouse or a divorce from the covered spouse
- have lost their employment due to the COVID-19 pandemic
These are the broad strokes with which eligibility is painted when it comes to COBRA health insurance — other situations may apply, specific to each case.
Besides applying for assistance under COBRA, you can also reach out to your employer’s HR department to find a solution for minimized or lost healthcare coverage. Under the Affordable Care Act, the employee in need of health insurance may be able to find a cheaper solution with less red tape, and it is part of an effective HR department’s job to be knowledgeable about this information so that they can provide it to employees.
If your employer has an insurance department as well, it would be wise to discuss your healthcare options with them if you find yourself in a situation where your employer-provided healthcare is coming to an end for any reason. Be aware that your employer, even if they agree to continue your healthcare plan under COBRA, can still choose to adjust or discontinue the healthcare benefits of their employees at any time.
Getting Value out of COBRA Insurance
COBRA health insurance coverage can be a viable option if you love your current health insurance plan and your employer cuts your hours, thus barring you from company health insurance benefits. However, it can be quite expensive.
When an employer provides insurance, they get what’s called a group rate for their employees. This rate reduction isn’t really so much a group discount as it is the cost an employer can pay without any sort of penalty to the health insurance company they have a contract with. In typical cases, the employer will pay around 80% of the premium for each of its qualified employees, which is a substantial percentage, leaving the recipients of the healthcare plan to pay around 20% of the premium. This is just one example of how health insurance in an office may be structured, but it’s a very common one.
If you are looking into COBRA coverage as an option between employment or whatever your situation may be, you should be aware that in most cases, the COBRA assistance recipient must pay 100% of the premium for the time that they’re receiving the assistance. Individuals (and their families) who qualify for COBRA may be required to pay a little bit over the premium of whichever healthcare plan they continue, up to 102%. While COBRA might be available to you, chances are high that you can find a more affordable alternative to get covered.
The average person will pay between $400 and $700 per month for COBRA coverage, which is unaffordable for most people. However, COBRA alternatives exist for more affordable health insurance options, including the following.
- Medicare: If you’re a U.S. citizen who is over the age of 65, that automatically qualifies you for Medicare. If you or your spouse paid Medicare taxes for 10 years, you are also eligible to have all future monthly premiums waived if you apply for Medicare Part A and Part B. You may also qualify for Medicare if you are younger than 65 but living with a disability.
- Medicaid: If you’re under 65 years of age and have no disabilities but you do fall into the low-income category, you can apply for Medicaid. If your financial resources inhibit you from paying for healthcare (and by extension the COBRA premium), then this choice could be your solution. Eligibility varies state by state, and several other categorizations may figure in besides being low-income.
- Marketplace: You also have the option of exploring the general health insurance marketplace, which is a forum where people can browse healthcare plans that may work for them, especially those made available under the Affordable Care Act. Although some states run their own marketplace, the federal marketplace can be found at HealthCare.gov.
- Cash payments: Many doctor’s offices and hospitals offer heavy discounts if patients offer to pay for their procedures, exams or tests in cash up front rather than using their insurance. In fact, you might be able to save a significant percentage by paying in cash, paying only a fraction of what your bill would be through insurance. If you can afford to do so, you may want to ask your medical care provider if discounts are available for those who pay in cash.
- Co-op: A healthcare co-op is a members-governed and funded group made up of providers and patients. Hence, the insurance is owned by both the doctors and the members who receive services from the doctors. They pay into a membership to receive these benefits. Co-ops not only circumvent large healthcare corporations, but they can also prove to be extremely financially feasible and more reliable than other healthcare options depending on where you live.
Compare Health Insurance Providers
If you’ve lost your health insurance, you have options to get the coverage that you and your family need. Benzinga offers reviews and insights on the following health insurance providers. You may want to consider beginning your search for coverage with the following articles.
- securely through Sidecar Health Access Plan's websiteBest For:No enrollment period health insurance
Plans referred to above are excepted benefit fixed indemnity insurance products marketed and administered by Sidecar Health Insurance Solutions, LLC and underwritten by Sirius America Insurance Company or United States Fire Insurance Company, depending on the state. As an excepted benefit plan, it does not provide comprehensive/major medical expenses coverage, minimum essential coverage, or essential health benefits. You cannot receive a subsidy (premium tax credit and/or cost-sharing reduction) under the ACA in connection with your purchase of such an excepted benefit fixed indemnity insurance plan. Also, the termination or loss of this policy does not entitle you to a special enrollment period to purchase a health benefit plan that qualifies as minimum essential coverage outside of an open enrollment period. Coverage and plan options may vary or may not be available in all states.
Do You Qualify for COBRA?
Although you may qualify for COBRA coverage after leaving your job or having your hours reduced, you may find that this insurance is too expensive for you to comfortably afford because you’re paying 100% of your premiums. However, the cost doesn’t mean that you must live without health insurance. If you don’t qualify for a subsidized federal healthcare program, you may want to explore marketplace plans or short-term health insurance options until you’re able to sign onto another form of employer-sponsored coverage.
Frequently Asked Questions
How much is COBRA health insurance per month?
The average monthly premium paid by COBRA holders is between $400 and $700. COBRA can be an amazing benefit if you truly need it and are willing to pay extra to keep your coverage, but chances are you can find something besides COBRA that’s more affordable.
Is COBRA insurance a good deal?
The most obvious benefit of signing up for healthcare under COBRA is that whatever insurance plan you had under your employer will not lapse and will continue as before. If that insurance plan was affordable and worked for you and your family, this choice can be a viable option. However, if you find that the premiums are too high for what you receive, it could be a good idea to go with COBRA initially until you can find a better plan for the same price or find a more affordable plan that covers your needs until you receive employer-sponsored coverage again.
Why would I use COBRA insurance?
People who love their employer-based health insurance can use COBRA to keep their coverage.