What is COBRA?


The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees to continue obtaining coverage from their employer-sponsored health insurance if they are let go or get reduced hours that no longer allow them to qualify.

Employers with 50 or more full-time employees have to provide health insurance coverage and help with monthly premiums. An employee becomes ineligible from receiving the coverage when they are let go or get reduced hours. COBRA gives the ex-employee the option to continue on the health plan for a limited time as long as they continue to make the premium payments on their own.

The former employee needed to have been enrolled in an employer-sponsored health plan the day before the qualifying event occurred to qualify for the program. Qualifying events being voluntary or involuntary job loss and a decrease of working hours that no longer allows you to qualify. Additionally, the health plan had to have been effective at least 50% of the business days the year prior. If the employer goes out of business or stops offering health insurance, the ex-employee will not qualify for COBRA.

One of the main premises of COBRA is that it allows you to continue receiving the same coverage after you stop working as you had when you were an employee. Therefore, any changes the employer makes to their health plan will affect the ex-employee. So, if the employer decides to stop offering health insurance or changes the plan, the former employee will just have to accept it. That is why continuing with COBRA might not be the best option. The plan may not serve you or your family in the best way. There is a 60-day period where you can decide to continue with the plan and if you chose not to, you have those 60 days to change your mind. If you opt-in to COBRA, you will be covered anywhere from 18 to 36 months depending on the qualifying event.

COBRA is given at a group rate, and while that may seem like a pretty good deal, it ends up being pretty expensive. That is because when the employee was with the company, the employer pays a majority of the premium costs. Now, the financial burden will be solely on the former employee. However, COBRA can sometimes be cheaper than some individual health plans. Research and find the best option for your circumstances.

The COBRA program can be a great option for those that have lost their job or eligibility for employer-sponsored health insurance. However, it can be too pricy for some to manage and the plan may not be the best fit for your needs.

Got Medicare Questions?

We hope this information on what is COBRA is helpful to you.

If you have questions about your Medicare coverage, call Empower Brokerage today. Let us help with your Medicare questions so you can get back to the activities you enjoy the most. (888) 446-9157 or click here to get an INSTANT QUOTE

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About Kayla Gonzalez

Kayla Gonzalez is a graduate of Texas A&M University and joined the Empower Brokerage marketing team in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile

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