How To Sign Up for COBRA

Health insurance is essential, and the thought of losing your health coverage can be stressful. Medical debt is a significant factor in many filing for bankruptcy. Fortunately, you may be eligible for short-term continuation of your health care coverage under the Consolidated Omnibus Budget Reconciliation Act, otherwise known as COBRA. Read on to learn about COBRA eligibility, what COBRA benefits are, and how to sign up for them.

What Is COBRA?

COBRA is an amendment to the federal Employee Retirement Income Security Act (ERISA). ERISA and COBRA rights require some employers to temporarily extend health benefits through COBRA continuation coverage to beneficiaries who experience a “qualifying event" that would otherwise make them ineligible for health insurance coverage. This isn't open enrollment into a group health plan.

Under COBRA, you can expect the same coverage your former employer offers in your COBRA plan. But providers deliver COBRA at your expense without any employer contribution, making COBRA premiums expensive—up to 102% of the plan's cost. It's also important to note that COBRA benefits and plan coverage are only offered for a limited time, typically between 18 and 36 months.

Am I Eligible for COBRA?

Your health care plan must be subject to ERISA to be eligible for COBRA. Typically, group health care plans maintained by private sector employers with 20 or more employees are subject to ERISA and offer COBRA protection. If you're unsure whether your plan provides COBRA, contact the plan's administrator to confirm eligibility. The Department of Labor also has helpful COBRA guides for employees.

You must also be a “qualifying beneficiary" to be eligible for COBRA. This means that, before the qualifying event, you had insurance through the group health coverage as an employee or as an employee's spouse or dependent child.

Finally, you must have experienced a “qualifying event" that caused you to lose insurance coverage. Qualifying events include:

• Termination of employment for reasons other than “gross misconduct"
• A reduction of employee's hours of employment, such as full-time to part-time
• A covered employee's Medicare eligibility
• Divorce or legal separation from the covered employee
• Death of the covered employee
• Loss of “dependent child" status

Qualified beneficiaries can sign up for COBRA within a specified period following a qualifying event.

How Do I Sign Up for COBRA?

To sign up for COBRA, you may need to give notice to the employer of the qualifying event before making premium payments. For example, the employer already has notice if the qualifying event is an employee's termination or death. But the employer may be unaware if the qualifying event is a divorce or the aging-out of a dependent child.

Under federal law, the employer must send you a COBRA election form within 45 days of the qualifying event, such as job loss. If you don't receive these forms, contact the employer promptly. Review the election notice carefully. The notice will include the plan options and prices.

The plans should be identical to the employer's plan and have the same coverage provided before the qualifying event. You will have 60 days to review the election notice and give a response. If satisfied with the terms, complete and return the election form within the election period to enroll in COBRA coverage.

The summary plan description provided by the employer includes additional information about signing up for COBRA. If you don't have this document, request it from the employer's benefits department or the insurance company.

Other Insurance Coverage Options

COBRA benefits are a temporary solution. Before signing up for COBRA, consider researching a more affordable long-term insurance solution.

You can shop and compare health insurance options through the Affordable Care Act health care marketplace at HealthCare.gov. The health insurance marketplace can check whether you qualify for a premium tax credit, which lowers your health insurance plan premiums. You can access HealthCare.gov anytime to see your eligibility for special enrollment. Major life events like job loss will allow you to enroll. This option may be more economical than signing up for COBRA.

You may be eligible for Medicaid, which can save you substantial money, especially if you have children and lost your job. Medicaid is available primarily based on income, and availability can vary by state. You may check whether you qualify by visiting the Medicaid website.

Get Legal Help With Your COBRA Questions

Finding the right health care coverage and understanding your rights can be overwhelming. You may want to speak with a knowledgeable attorney if you need help or advice about signing up for COBRA. Contact a healthcare and benefits attorney to learn more so you can make an informed decision.