What is COBRA, and How it Works


If you lost your job and had insurance benefits through your employer, you may be eligible for COBRA coverage options. Now, you're sitting at home reviewing the information given to you by your employer, wondering if COBRA is the best option for you. Before making a decision, there are a few essential points to consider regarding coverages and benefits to COBRA.


What is COBRA, and how does it work?


To start, what exactly is COBRA? COBRA - the Consolidated Omnibus Budget Reconciliation Act - is the continuation of coverage required by health plan groups to covered employees and their dependents. As mentioned before, COBRA is offered to employees who have lost their jobs to ensure coverage through loss of employment and other qualifying events such as:

  • Being laid off or terminated (except for gross misconduct)
  • Shortage of hours
  • Loss of coverage due to a divorce
  • Death of covered employee
  • Quitting your job
  • Becoming entitled to Medicare
  • Child loss of dependent status


How long is COBRA eligible?


According to the US Department of Labor, depending on your circumstances and qualifying events, the length of COBRA coverage may vary. Usually, staying up to date with your premiums will grant you up to 18 months of COBRA coverage. You may be eligible for a more extended timeframe if a second "qualifying event" were to occur. 


For instance, if you become eligible for Medicare within those 18 months of your qualifying event, then COBRA coverages may be extended for up to 36 months.


Dependents qualify for COBRA.


To ensure families are covered, spouses and dependents can apply under certain qualifying events and circumstances and may qualify for up to 36 months of coverage.

  • Primary beneficiary enrolls in Medicare
  • Benefits are no longer eligible, due to divorce or death of the covered employee
  • The child turns 26 and is no longer eligible for parents insurance plan


Signing up for COBRA


If you fall under one of the qualifying events, mentioned above, then you are entitled to elect COBRA coverage. Your health insurance administrator should provide all of the information necessary to guide you through the enrollment process. You are then given a 60 day election period from the termination date of your current insurance plan to decide whether or not COBRA coverages would suit your lifestyle.


Is COBRA right for me?


If you choose to elect COBRA, you will be required to pay the initial premium fee within 45 days of election, and the costs can be high. 


If any payments are missed, this will automatically terminate your coverages through COBRA.


It is crucial to understand that COBRA is for a limited time, typically ranging from 18-36 months of coverage.


If your previous employer chooses to change plan benefits, then your COBRA coverages will change.


Before you make a final decision to elect COBRA, there might be a better option to fit your lifestyle. Many Insurance carriers offer 'Short-Term Major Medical Plans' and can be more cost-effective than the offered COBRA plans.


First Family Insurance can assist you with finding the right plan that works for you and your situation. Give us a call today, and one of our licensed professionals can help guide you into making an informed decision that will best fit your economical lifestyle.