Am I Eligible for COBRA Health Insurance?

Not everyone losing their job-based health insurance is eligible for COBRA.

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If you anticipate a change in your life, planning for health insurance after that change is an important part of maintaining your financial security and your health. A popular way to get health insurance after a major life event is to continue your employer-sponsored health insurance using COBRA continuation coverage.

If you get a divorce, become a widow or widower, or lose your job, losing your health insurance can add even more stress when your coping mechanisms are already maxed-out. If you’re scrambling to find a new job, move, learn how to live without a partner, or all of those things at once, choosing a new health plan in the individual market can be overwhelming (to be clear, selecting a new plan isn't as hard as it might seem, and you'll definitely want to compare individual market plans with the COBRA offer you receive. But in some cases, continuing your existing coverage via COBRA will be the best option).

With COBRA continuation coverage, you don’t have to pick a new plan. You simply continue the same employer-sponsored coverage you currently have. No finding a new doctor because your current doctor isn’t in-network with your new health plan. No transferring medical records or prescriptions. You can continue your current health insurance for up to 18 or 36 months (depending on your circumstances), which should be time enough to get back on your feet and obtain new coverage.

However, not everyone is allowed to use the COBRA law to continue their health insurance. Understanding whether or not you’re eligible for COBRA health insurance will help you plan for a secure future.

To be eligible for COBRA, you must satisfy all three of the following requirements:

  1. Your current health plan must be subject to the COBRA law. Not all health plans are.
  2. You must be considered a qualified beneficiary of your current health plan.
  3. You must have a qualifying event.

Is My Health Insurance Subject to COBRA?

Not all health plans have to offer COBRA continuation coverage. Your plan does if it’s a group plan offered through a private-sector employer with at least 20 full-time employees. COBRA also applies to most state and local government health plans.

You won’t be eligible for COBRA if there is no health plan to continue because your employer went bankrupt. In addition, COBRA doesn’t apply to health plans offered by the federal government, by churches, or by some church-related organizations.

For example, when I resigned from my nursing job with Florida Hospitals, I wasn’t eligible for COBRA health insurance. This had nothing to do with me; it was because my former employer, Florida Hospitals, is part of Adventist Healthcare, an organization run by the Seventh Day Adventist Church. Because Florida Hospitals is a church-related organization, its employee health plan isn’t subject to the COBRA law.

But when I quit my job working at a Kaiser Permanente hospital, I was eligible for COBRA health insurance. Kaiser is a large, private-sector, non-church related employer. Kaiser’s health plan was subject to the COBRA law; it had to offer me COBRA continuation coverage.

Am I a Qualified Beneficiary?

To be considered a qualified beneficiary, you must be insured by the health plan the day before the qualifying event happens. In addition, you must be one of the following:

  • An employee of the employer sponsoring the health plan.
  • A spouse or ex-spouse of that employee.
  • A dependent of that employee.
  • An agent, director, or independent contractor that isn’t technically an employee, but that participates in the health plan.
  • In some cases, you may be eligible if you’re a retired employee, retiree’s spouse, or retiree’s dependent child and you’re losing coverage because your former employer is going bankrupt.

Do I Have a Qualifying Event?

What qualifies as a life event depends on whether you’re the employee losing coverage, or a spouse or dependent of that employee. Your life-event will qualify you for COBRA coverage if you’re the employee and:

  • You’re laid off.
  • You quit.
  • You’re fired, but not for gross misconduct like stealing or assaulting the boss.
  • Your employment is terminated for any other reason.
  • You’re still employed, but your hours are reduced to a level that causes you to lose your health insurance benefit (this can be a voluntary change in hours that you request, or a change that's imposed on you by your employer; either way, you'd be eligible to continue your coverage with COBRA).

Your life-event will qualify you for COBRA coverage if you’re the spouse or dependent of the covered employee and you’re losing coverage because:

How Does My Health Plan Know to Offer Me COBRA?

If you’re eligible for COBRA health insurance, you won’t get a COBRA election notice from your health plan if the health plan doesn’t know about your life-changing event. Someone has to tell the health plan administrator. This is known as "giving qualifying event notice.”

The employer will tell your health plan if your loss of coverage is due to the termination of the employee, death of the employee, employee Medicare eligibility, or reduction of employee work hours. It’s your responsibility to tell your health plan if your loss of coverage is due to divorce, legal separation, or a young-adult losing dependent status under plan rules.

In some cases, you may be tempted to withhold notice. If the employer and health plan don’t know you’re legally separated, you might think you won’t have to pay the COBRA health insurance premiums. You’d just continue on with spousal coverage as though you’re a married couple. Think again.

You’re required to give qualifying event notice in a timely manner. Not giving qualifying event notice is a type of fraud; you’re basically stealing health insurance coverage for which you’re no longer eligible. The employer may demand reimbursement for its share of the monthly premiums paid for the coverage you were no longer eligible to receive. The health plan may demand reimbursement for the health care it paid for while you were receiving coverage fraudulently.

That said, you don’t need to give notice while you’re going through divorce, or legal separation proceedings. You’re not obligated to give notice until the divorce or legal separation actually takes place.

How Should I Decide Whether to Continue My Coverage With COBRA?

If you have the option to continue your health plan with COBRA, you don't have to decide right away. You'll have a 60-day window during which you can sign up for COBRA (it starts on the day you get the COBRA notification, or the day that your employer-sponsored coverage would otherwise end—whichever is later).

So if your coverage is scheduled to end on June 30, you could think about it for a while and then sign up for COBRA in August. You'd have to pay the premiums for July and August at that point, because COBRA is designed so that it's seamless coverage—the plan you had through your job just continues to cover you, without any breaks.

In that situation, you also have a special enrollment period during which you can pick a plan in the individual market, either through the exchange in your state, or directly through an insurer (make sure you use the exchange if you're eligible for​ premium subsidies, as they aren't available outside the exchange).​

Your special enrollment period for individual market coverage starts 60 days before your employer-sponsored plan ends, and continues for another 60 days afterward. You have access to the special enrollment period regardless of whether you have the option to continue your employer-sponsored plan with COBRA. And your special enrollment period in the individual market continues for the full 60 days after your employer-sponsored plan would have ended, even if you elect COBRA during that time.

So you can take your time and compare COBRA with the options that are available in the individual market. But once your COBRA election window closes, it can't be reopened. And if you miss your special enrollment period for individual market coverage, you'd have to wait for the next annual open enrollment period (November 1 to December 15 in most states) if you decided you wanted to enroll in an individual market plan instead of COBRA (if you elect COBRA and then fully exhaust the coverage, you'll have an opportunity to enroll in an individual market plan—or a plan from a new employer—at that point, as the termination of your COBRA coverage would trigger a special enrollment period. But voluntary termination of your COBRA plan would not trigger a special enrollment period).

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