How Does COBRA Health Insurance Work?


COBRA allows employees to continue with health insurance benefits even after they stop working for their employer. Learn how does COBRA insurance work here.

If you’ve been laid-off or lost your job, losing your health insurance can be a serious source of worry and stress.

With COBRA, you’re able to continue with your health insurance benefits, even after you stop working for your employer. 

So, how does COBRA insurance work and how can it benefit you? Read on to learn more about this program to find out how COBRA affects your coverage.

What is COBRA?

COBRA is short for the Consolidated Omnibus Budget Reconciliation Act. It is a federal law passed in 1985. This law allows some employees to continue their health insurance and keep their existing benefits, even after they leave their employer.

In order to qualify for COBRA coverage, you must meet a few specific conditions. First, your employer group health plan must be covered by COBRA.

Next, you must have lost health insurance coverage due to a “qualified event.” Finally, you must be deemed a “qualified beneficiary” in order to get COBRA benefits.

A qualifying event means that you have reduced hours or that you have been laid-off. It does not include instances where you’re fired due to “gross misconduct” or for violating company policy. Your qualified beneficiaries under COBRA include yourself, your spouse, and any dependent children under the age of 26.

How Does COBRA Insurance Work?

It’s important to note that COBRA does not go into effect immediately. Your employer has 30 days to report a “qualifying event,” and you have 60 days to decide if you want to sign up for benefits.

You are entitled to at least 18 months of COBRA coverage if you lost your job or had your hours reduced. For all other qualifying events, you can be covered for a minimum of 36 months or even longer with an extension.

Your coverage level should remain the same while you’re under the COBRA plan. This means you can still see your doctor and receive treatment while you’re covered.

Are There Alternatives to COBRA?

You will need to pay premiums when you enroll in COBRA, and they’re usually higher than standard insurance. When asking, “how does COBRA insurance work,” consider the monthly costs and try to look for less expensive alternatives such as Medicaid, military spouse coverage, or the Health Insurance Marketplace.

Most COBRA insurance alternatives will cost you less every month in premiums. It’s worth it to try and shop around for rates while you wait for the COBRA plan information, just to be sure.

A major benefit of the COBRA plan is that it prevents you from dealing with a gap in coverage if you lose your job. For those with chronic health problems or pre-existing conditions, it’s a good idea to enroll until you find a different plan.

Stay Covered with COBRA

Once you know how does COBRA insurance work, you’ll have peace of mind knowing you can keep your insurance if you lose your job. Look into alternatives that may offer you coverage at a lower price if possible.

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