What is COBRA Insurance?
The Consolidated Omnibus Budget Reconciliation Act, widely known as COBRA, was created in 1986 as part of the larger Employee Retirement Income Security Act of 1974 (ERISA). It gives certain workers the right to pay premiums and keep their group health insurance coverage in certain situations. Before Congress passed the ERISA law, people who had health insurance through their employer lost it as soon as they left their job for any reason.
After COBRA was passed, workers who left a company that offered health insurance could choose to keep their coverage temporarily. COBRA coverage is often more expensive than what active employees pay for their group health plan because the company typically pays for some or all of the coverage.
Under COBRA employers are no longer responsible for any health insurance costs. All medical bills can be charged directly to the ex-employee who is receiving the services. COBRA is usually offered to qualifying employees for anywhere between 18-36 months. However, COBRA eligibility and how long the coverage continues depends on certain circumstances.
Who Is Required To Offer COBRA?
What are Mini-COBRA Laws?
Another thing to think about is that even if a company has less than 20 full-time equivalent employees, your state might still require COBRA insurance to be offered. Some states have what are called, “mini-COBRA” rules aiming to cover employees providing health insurance but have fewer than 20 employees. Like federal COBRA, mini-COBRA laws require group health plans to provide continuing health coverage to eligible employees who would otherwise lose coverage due to a qualifying event. In a few states, the number of workers is between 2 and 19. Other states require almost all businesses, no matter how big or small, to follow the rules of mini-COBRA.
- Arkansas
- California
- Colorado
- Connecticut
- District of Columbia
- Florida
- Georgia
- Illinois
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Minnesota
- Mississippi
- Missouri
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- West Virginia
- Wisconsin
- Wyoming
If a business is subject to mini-COBRA laws, they must let eligible workers know about their rights to keep coverage. The date for giving notice varies by state, so check your state’s laws to make sure you get the word out on time.
Who Qualifies for COBRA Insurance?
Types of Employees
Employees may be qualified for COBRA continuation coverage if they are enrolled in an eligible group health plan and meet certain qualifying event requirements. This could include:
- Full-time employees
- Part-time employees
- Spouses of eligible employees
- Dependents of eligible employees
- Retirees
There are limits to how long a company has to offer COBRA coverage. Even if the business has at least 20 employees, some employees won’t be able to get COBRA coverage because they didn’t choose a qualifying plan, they were fired under certain circumstances, or other special situations including:
- Employees who are ineligible for coverage in the group plan
- Workers who declined to participate in the group health coverage
- Employees who are enrolled for benefits under Medicare
- Employees terminated for gross misconduct
Qualifying Events
In addition to being an employee and being enrolled in a qualified group health plan, an employee must also experience a qualifying event to gain continued coverage. This usually includes something that causes the employee to lose their group health benefits such as:
- Job loss, whether voluntary or involuntary (except in the case of gross misconduct).
- Reduction in work hours, resulting in the loss of employer-sponsored health insurance
COBRA coverage can also extend to an employee’s spouse and dependents if the qualifying event affecta the family’s ability to keep their health insurance. Qualifying events affecting spouses and dependents include:
- An employee’s job is lost, or hours are reduced causing his dependents and/or spouse to lose coverage
- A spouse gets divorced or legally separated from the covered employee.
- The covered employee passes away
- The covered employee becomes eligible for Medicare, and causes dependents to lose coverage
Employer Responsibilities
Plan administrators are required by law to tell employees who qualify for COBRA, when their status changes. In some cases, the employer themself is in charge of running the plan. If an employer has employees that qualify for COBRA, they are legally responsible to do the following:
- Tell the group health plan administrator within 30 days of a qualified event if a person is eligible for COBRA.
- Give notice to employees who are qualified for COBRA within 44 days about their COBRA rights.
- If COBRA coverage is rejected for any reason, let the people who need it know within 14 days.
- If the employee chooses to keep coverage under COBRA, give them the same coverage as the plan they were on before the qualified event.
Once an employee has a qualifying event, COBRA requires group health plans to give the employee and any qualifying dependents ample time to decide if they want to keep their coverage under COBRA. More specifically, the employee must have 60 days to choose to keep benefits or not. Even though everyone in a household may have experienced the same qualifying event, they can make different decisions regarding continued coverage. For example, the employee, their partner, and any qualifying dependents can each choose whether or not they want to keep their coverage, depending on what’s best for them.
Health Insurance Alternatives to COBRA
If you experience a qualifying event, but either your employer doesn’t offer COBRA benefits, or COBRA benefits are simply too expensive for you to pay for, you have other options. Depending on your financial situation and personal preferences, you can get:
- Marketplace Health Insurance: These are Affordable Care Act (ACA) plans purchased through the Health Insurance Marketplace. It’s also important to not that after losing employer coverage, you’ll qualify for what’s called a Special Enrollment Period (SEP), allowing you to sign up for a new health plan outside of the normal Open Enrollment Period.
- Short-Term Health Insurance: This specialized coverage provides temporary insurance covering essential healthcare needs. A downfall of these plans is that they generally have limited benefits compared to traditional coverage.
- Medicaid: Depending on your income, you could qualify for Medicaid, which is a stat-run program that offers low-cost or free health coverage.
- Private Health Insurance Plans: These are standard health insurance plans purchased directly through an insurance company or broker.
How EZ Can Help
It’s crucial to understand the laws and requirements regarding COBRA, so that you know your health insurance rights after leaving a job or experiencing another qualifying event. Even though COBRA coverage is a great option for many individuals, for others, it’s either not available at all or simply unaffordable. If this is the case for you, don’t worry, you have other options, and EZ.Insure is here to help you explore all of them.
EZ.Insure makes it simple get the protection you deserve. Our user friendly-platform offers free, no-obligation quotes, a side-by-side health plan comparison tool, and 24/7 access to expert insurance agents.
To get started, and learn more about your health coverage options, simply enter your zip code in the bar below or call 209-593-6584 to talk to an agent.