COBRA stands for Consolidated Omnibus Budget Reconciliation Act. Cobra insurance is a type of health insurance while gives employees the opportunity to continue receiving the health insurance coverage provided by their employer for a limited time, even after they have left or quit their job.
Eligibility for COBRA insurance is however not automatic. There are certain criteria to be met or conditions before you are eligible for COBRA insurance.
How does COBRA insurance work if I quit my job?
1. If you quit your job, you have a 60 days window to decide if you want to enroll for the insurance plan.
2. Your employer is required to provide you with information on how to enroll for COBRA coverage within the expected timeframe after you leave your job.
3. You must have been enrolled in an employer-sponsored health coverage plan prior to quitting your job.
4. The employer-sponsored coverage must be a group health plan.
5. Your employer must have at least 20 employees under the group health plan.
6. You will be required to pay the full cost of your health insurance premiums and associated costs, even the portion your employer previously covered. This premium may be higher as you no longer have your employer subsidizing the cost.
7. You must experience a qualifying event.
What Event Qualifies You for COBRA INSURANCE?
A qualifying event refers to any event whose occurrence could lead to you losing your employer-sponsored health insurance coverage. These events could include but are not limited to the following;
. Quitting your job
. Losing your job involuntarily
. Getting divorced
. Becoming ineligible for your employer-sponsored health coverage due to a reduced work hours.
COBRA insurance is very important for individuals who would have otherwise been unable to obtain coverage while they remain unemployed and are seeking a new job. It can however be expensive to maintain, considering the premiums to be paid. As such, it would be a good idea to also seek, compare and also try to consider other health insurance plans such as purchasing an individual health insurance plan through a health insurance exchange or marketplace, or coverage through a spouse’s employer-sponsored health insurance plan. These other health insurance options may be cheaper than the COBRA health coverage plan.
How Much Does COBRA Insurance Cost?
There is no fixed price for COBRA insurance coverage, the general cost for COBRA coverage is however typically higher than the cost of health insurance you were paying while you were employed because your employer-sponsored health plan subsidizes a portion of the cost.
Factors that could influence the cost of COBRA coverage
1. Your location
2. Your former employer
3. The plan you were previously enrolled in
4. The level of coverage or plan you decide to go for.
To be able to get an accurate estimate of how much COBRA insurance could cost you based on your specific situation, you should contact your former employer’s benefits administrator or COBRA administrator. They should be able provide you with information on the cost of your specific plan and the options available to you.
However, the average cost of COBRA insurance can be quite high, as it can be up to 102% of the full premium for the coverage. That is, the full premiums of the health plan plus a 2% administrative fee. According to the Department of Labor, the average cost of employer-sponsored health insurance in 2020 was $7,470 per year for single coverage and $21,342 per year for family coverage. This means that the cost of Cobra insurance for a single person could be around $154 per month ($7,470 x 102% / 12), and for a family, it could be around $440 per month ($21,342 x 102% / 12). Please note that these are just rough estimates.
How Long Does COBRA Health Insurance Coverage Last?
Typically, COBRA coverage lasts for 18 months, although coverage can be extended in some situations or conditions, like in the case of a disability, COBRA coverage can be extended to 36 months. Within these months, you will enjoy all the benefits you previously had access to while you were employed.
You can also choose to cancel your COBRA coverage at any point you feel like even if the plan has not gotten to the 18 months limit yet. It could be after getting a better health insurance plan or upon getting employed in a new institution that offers health coverage to employees.
Finally, it is very important to note that while COBRA coverage provides you a safety net while you are unemployed, you must make your payments on time or you face the risk of losing your COBRA coverage.
