What Is COBRA Insurance?

Losing a job or having your hours cut can leave you without medical cover when you still need to see doctors, get prescriptions, or have ongoing treatment. COBRA insurance is a federal rule that allows you to stay on your former employer’s group health plan for a limited time—usually 18 to 36 months—so you don’t face a sudden gap in care while you look for a new plan.

How Does COBRA Insurance Work?

Under the Consolidated Omnibus Budget Reconciliation Act, companies with 20 or more full-time workers must offer COBRA insurance as continuation cover after a qualifying event such as job loss (except for gross misconduct), reduction in hours, divorce, or a child turning 26.

• You’ll receive an election notice and have 60 days to decide.

• Cover is retroactive to the day your employer policy ended once you pay the first bill.

• You may keep the exact same doctors, network, and deductible schedule you had before.

Who Is Eligible for COBRA Insurance?

Employees, spouses, and dependent children already enrolled in an employer-sponsored health plan can qualify for COBRA insurance if the firm had at least 20 staff on 50% of business days in the past year. Part-timers who drop below benefits hours, early retirees, and family members affected by death or Medicare enrollment of the covered employee are also eligible. Pre-existing conditions are still covered—there’s no new waiting period.

Key Advantages

1. Continuity of care. Treatments, prescriptions, and ongoing therapies continue without disruption.

2. No new underwriting. Pre-existing conditions stay covered because the plan never technically lapses.

3. Extra decision time. You can compare marketplace policies or a spouse’s plan while protected by COBRA insurance.

Main Drawbacks

• Higher premiums. You now pay the employer share plus up to a 2% admin fee.

• Limited duration. Most people age off at 18 months unless a second qualifying event extends it.

• No upgrades. You must stick with the same benefit menu even if your needs change.

Costs and Payments

The bill for COBRA insurance equals 100% of the old premium + 2% administration. For a family plan, that can top $1,000 per month. You have 45 days after electing cover to send the first payment and must pay monthly on time; one missed due date can cancel the policy.

How to Enrol – A Simple Checklist

1. Read the election packet. HR or a third-party administrator mails details on premiums, due dates, and ways to pay.

2. Return the election form. Mail, email, or complete it online within 60 days. Keep a copy.

3. Send the first premium. Cover back-dates automatically to prevent a lapse.

4. Compare alternatives. A Special Enrolment Period lets you shop the Health Insurance Marketplace at the same time.

5. Mark the end date. Set reminders to move to a new plan before the continuation window closes.

Alternatives to Consider

Although COBRA insurance is convenient, it isn’t always cheapest. Options to weigh include:

• Marketplace plans. Subsidies under the Affordable Care Act can slash premiums based on household income.

• Medicaid. Lower earnings after job loss may qualify you for free or low-cost state cover.

• Spouse or partner plans. Many employers allow mid-year enrolment when a household member loses outside cover.

• Short-term health insurance. Fills gaps up to 12 months (rules vary by state) but may exclude pre-existing conditions.

Tips for Cutting the Cost

• Use HSA or FSA funds to pay premiums tax-free.

• Ask providers for cash-pay discounts if deductibles reset.

• Schedule elective care before your last day at work to lock in lower co-pays.

• Check if you qualify for the Health Coverage Tax Credit to offset a portion of premiums on certain layoffs.

Frequently Asked Questions

Does COBRA insurance cover dental and vision?
Yes—if those benefits were part of the original group plan, they stay in force.

Can I drop COBRA early?
Absolutely. You can cancel at any time and move to another policy.

Will a new job end my COBRA cover?
Usually, yes. If you enrol in your new employer’s health plan, COBRA continuation stops.

Bottom Line

COBRA insurance offers a safety net that keeps your medical routine steady during a career shake-up. It’s simple—keep the same card, same doctor, same care—but you shoulder the full premium. By understanding how it works, who qualifies, and what cheaper alternatives exist, you can protect your health and your wallet without stress. That sort of stability is exactly what Shifton believes every employee deserves while navigating life’s transitions.