COBRA enables qualifying individuals to continue to purchase health care insurance from a group health plan after losing health insurance coverage through an employer. Those who qualify for COBRA coverage can extend their participation in a health plan for an additional 18 months after losing their coverage. Although more expensive than most employer-based coverage plans, COBRA represents a less-expensive alternative than individual coverage, according to the U.S. Department of Labor.
If you lose your job or see your hours reduced to a level that no longer qualifies you to participate in your employer’s group plan, you are eligible for COBRA coverage, as long as you meet other eligibility requirements. Former employees eligible for COBRA include both those who have lost their job voluntarily and involuntarily. The lone exception is for employees who were dismissed from their positions because of gross misconduct.
COBRA is not available for former workers of all types of employers. COBRA-eligible employees must have worked for either a private business with 20 or more employees or a governmental entity. Full-time workers count as one employee in the calculation of employee numbers, while part-time employees have a fractional value that is based on their hours. A private employer must maintain a level of at least 20 employees on more than half of its business days for its former employees to have COBRA eligibility.
Spouses and Children
Employee beneficiaries can access COBRA coverage in certain circumstances. For instance, spouses and dependent children can become eligible for COBRA coverage separate from the employee if the employee switches coverage to Medicare. Or, if the employee and spouse complete a divorce, the spouse and dependent children are eligible for COBRA coverage. They are also eligible if the employee dies. Finally, dependent children who grow too old to be part of a plan, or who otherwise become ineligible for their parent's employee-based plan, can acquire COBRA coverage.
You cannot claim COBRA coverage after losing or leaving your job if you were not already enrolled in your employer’s health plan when you were working. In addition, your former employer must continue to offer the group health plan to its current employees for you to remain eligible. If the employer stops providing health coverage after your termination, you cannot enroll in COBRA. Workers or beneficiaries have 60 days after being notified of their COBRA-qualifying event, such as being fired at work, to choose COBRA coverage. If they do not claim COBRA in that time period, they become ineligible.