What is COBRA continuation coverage?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, federal legislation that allows you – if you work for an employer group of 20 or more employees – to continue to purchase health insurance for up to 18 months if you lose your job or your employer-sponsored coverage otherwise ends. (Coverage can continue for up to 36 months in some situations.)
How do you qualify for COBRA continuation coverage?
You generally qualify for COBRA coverage if you were covered as an employee or dependent on an employer-sponsored policy, and the job or insurance coverage ended. But there are some circumstances where you won’t qualify for COBRA. You’re not eligible for COBRA coverage if your company changes to a different health care plan and you want to continue under your existing plan, because you are instead eligible for coverage through the new plan.
What does COBRA continuation insurance cover?
COBRA allows you to maintain coverage through the same plan you had while you were employed. Employer-sponsored coverage usually pays for costs such as hospitalizations, medical visits, prescription drugs, mental health care, rehabilitation services, and more.
How much does COBRA coverage cost?
COBRA enrollees are responsible for the full cost of premiums for their former employer’s plan – plus a 2 percent administrative fee.
While you were employed, you paid only a portion of your coverage cost because your employer also paid a share. Paying the full price (plus a 2 percent fee) means your cost for COBRA coverage may seem much higher.
How does the Affordable Care Act impact the availability of COBRA coverage?
Before the bulk of the Affordable Care Act‘s (ACA) provisions took effect in 2014, COBRA was often the only realistic option for people with pre-existing conditions who were leaving their job and losing access to their employer-sponsored health insurance. Before 2014, coverage in the individual market was medically underwritten in most states, making it difficult or impossible for people with serious pre-existing conditions to obtain.
COBRA is still available — the ACA didn’t change anything about that — but individual market coverage is now guaranteed issue for all applicants, regardless of their medical history, and losing access to an employer-sponsored plan is a qualifying event that triggers a special enrollment period in the individual market. So you can compare COBRA and individual market coverage to determine which one will be a better fit for your situation.