Your Choosing COBRA to Avoid a Loss of Coverage

If you lose your employer-sponsored health insurance plan due to a qualifying life event such as loss of employment, divorce, or death of a spouse, you may be eligible to receive COBRA continuation coverage. This can provide you with some protection against losing your coverage, although it's not always the best option if you're looking to save money.

The Cost of COBRA Insurance

Depending on your state, you'll probably pay more in premiums to obtain individual COBRA insurance than you would for an employer-sponsored health plan. You'll also have to pay a 2% administrative fee for the plan you elect to use.

You may be able to save by taking advantage of the federal government's extended eligibility rules, which allow you to enroll in a COBRA plan up to two years after your job-based coverage ends. The extra time allows you to decide if it makes more sense to pay the higher costs or switch to a new employer-sponsored plan with less expensive rates and fewer deductibles, says Emily Bremer, a spokesperson for the National Association of Health Underwriters.

In addition, some states have "mini-COBRA" laws that allow you to extend your COBRA benefits for up to an additional 18 months. However, these plans don't cover certain types of medical expenses, and they typically have lower out-of-pocket costs than a traditional employer plan.

Your Choosing COBRA

When you lose your group health insurance, you must be given a notice describing your rights under COBRA. This information is usually found in a plan summary document (SPD), sometimes called a summary of benefits and coverage (SBC).

If your plan offers COBRA, you'll have 60 days to make an election to receive COBRA continuation insurance. The plan must send you a general notice of your right to elect COBRA, along with instructions on how to do so. If you have a spouse and children, the plan must also notify them of their independent rights to elect COBRA coverage.

Affected individuals are required to give the plan administrator notice of a qualifying event, such as loss of employment or divorce, within 60 days of the event. They must also submit the form that confirms their election of COBRA to the plan administrator.

Your Using COBRA to Avoid a Loss of Employer-Based Insurance

Many people who lose their employer-sponsored health insurance choose to take advantage of the federal COBRA continuation program because it's affordable and it can protect them from losing their coverage. Often, however, they don't understand how to get the most out of it or that it can actually be more affordable to enroll in a new health plan.

The most important step in the process is to ensure that your family, including you and any dependents, are informed of their rights under COBRA. They can do this by reading the initial notice provided to them by their employer or by calling the plan's HR department if they have questions.

You must also inform your plan if you qualify for an extension of COBRA coverage. You must do this within 31 days of the date of the qualifying event or within 60 days of your employer's mailed notice of the extension, whichever is later.

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