Infographic: What You Need to Know About COBRA Insurance

The following infographic explains COBRA insurance need-to-knows.

Need-to-knows include a COBRA overview, eligibility requirements, qualifying life events, State Continuation coverage, and more.

Infographic: COBRA insurance need-to-knows

What You Need to Know about COBRA Insurance

COBRA (Consolidated Omnibus Budget Reconciliation Act) helps prevent gaps in healthcare coverage by allowing employees to continue their healthcare coverage for a defined period of time after terminating employment.

Who Is Eligible?

You qualify for COBRA if:

  • Your company has at least 20 employees and a group health plan, and you experience a “qualified” life event that causes the loss of your healthcare coverage
  • You are the spouse or dependent child of an individual who qualifies for COBRA
  • You participate in a local or state government-sponsored group health plan that is eligible for COBRA (check your local/state laws to determine eligibility)

What Constitutes a Qualified Life Event?

  • Losing your job for any reason except gross misconduct
  • A reduction in number of hours worked
  • Divorce or legal separation from the covered employee
  • The covered employee becomes eligible for Medicare
  • The covered employee dies

How Does COBRA Work?

Election Period: The employer must provide a minimum of 60 days for you to elect continuation of your healthcare coverage.

Revocation of Waiver: If you opt not to receive COBRA, you can revoke the waiver and continue your coverage at any time within the election period.

Length of Coverage: COBRA coverage can last up to 18 months. You may apply for an additional 18 months (total of 36 months) of coverage under certain circumstances.

Benefits: You are entitled to continue the same coverage you had prior to the qualifying event.

Cost: COBRA cannot cost more than 102% of what other employees pay for the same coverage.

HSA: Health Savings Account funds can be used to pay COBRA premiums.

Loss of COBRA:

Your health plan can discontinue coverage before the COBRA term expires for the following reasons:

  • Failure to pay premiums in a timely manner
  • Employer terminates the group health plan
  • A qualified beneficiary of your plan:
    • Begins receiving coverage from a different group healthcare plan
    • Starts receiving Medicare benefits
    • Causes loss of coverage due to inappropriate behavior, such as fraud

State Continuation

  • Allows employees of smaller companies (fewer than 20 employees) to continue their current healthcare coverage for up to nine months.
  • To qualify, employees must have continuous coverage for at least three months prior to the job or coverage termination date.
  • Termination of current plan coverage must be due to loss of job or reduction in hours worked.
  • Spouses and dependent children are eligible for State Continuation.
  • State Continuation laws vary by state. Learn about your state’s continuation laws.

For more on other COBRA insurance need-to-knows, read this COBRA and State Continuation FAQ.

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