COBRA Insurance Coverage - Is it for You?

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COBRA insurance coverage is something we’re hearing more about in the news as the economic downturn increases and more jobs are lost. Recently, the website announced that the first 500 questions about COBRA and alternate health insurance options would be answered and put up on their website. They were soon overwhelmed with emails and questions. You may currently be receiving calls from collections agencies, or about to be laid off. If you find yourself with a reduction in hours or termination and are wondering how you’re even going to afford health insurance this year, this article will give you some advice.

What is COBRA Insurance Coverage?

In 1986 Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA). The act provides continuation of one’s group health coverage when it might otherwise be discontinued. COBRA allows certain former retirees, spouses, employees, and children to receive their health insurance temporarily at the group rate, although the coverage is only available if you meet certain conditions.

Who’s Eligible

According to the United States Department of Labor, group health plans with 20 plus employees on more than fifty percent of its usual business days are subject to COBRA insurance coverage. Full and part time employees are counted, with part time employees counting as a percentage of an employee depending on how many hours they work. There are certain events that can qualify someone to receive COBRA insurance coverage. Employees must be terminated, either voluntarily or involuntarily for any reason other than gross misconduct. There may also be a reduction in hours working. For spouses and of employees the same conditions apply, although a spouse can also receive COBRA insurance coverage if the employee becomes eligible for Medicare, if there is a divorce, or a death. For children, there must also be a loss of dependent status.

How Long COBRA Lasts

COBRA insurance coverage usually lasts a maximum of eighteen months if the beneficiaries are eligible for group coverage. However, certain events or a secondary event after the initial period of COBRA coverage may allow the individual to claim up to thirty six months of coverage. COBRA insurance coverage begins on the date you would have normally lost health insurance coverage, such as job loss. One should use caution, as there are things that can be done that will terminate your COBRA coverage earlier than the previously mentioned timelines: premiums not being paid on time, the employer discontinues the health plan, or the employee becomes eligible for Medicare will all effect COBRA.

Payment Responsibility

Payments for COBRA insurance coverage are made by the individual receiving benefits, and the cost cannot exceed 102% of the cost that an individual without a “qualifying event,” such as a loss of hours, would pay. This includes the portion the employee would pay as well as the portion the employer would have paid. A 2% administrative cost is also added to the total. If the qualifying person gets the eleven month disability extension, the premium can reach a total of 150% the total cost. The good news for people deciding to receive COBRA insurance coverage is that the cost is usually fixed in each one year cycle, and you must be allowed to pay your premium montly, or at an interval more convenient to you, such as bi-weekly.

2009 Stimulus Change

A recent change to the COBRA plan went into effect with the recent stimulus package by President Obama. The American Recovery and Reinvestment Act of 2009 expands the eligibility of COBRA insurance coverage and gives an important payment reduction to certain people. If you were terminated from the first of September 2008 through the end of 2009, you may be eligible for up to a 65% decrease in your premium. To find out if you’re eligible under this new act, call 1-866-444-3272 and speak to a benefits advisor.

How This Helps You

What all this means is you may be eligible for insurance, assuming you meet the qualifications, that will be much cheaper than individual provider insurance while receiving all the benefits you did while employed. The amount of money you save with COBRA insurance coverage before getting a new job could equal thousands, and keep the worry of your family’s health off your mind while you work to find new employment. With the the change from the 2009 stimulus package you may even be eligible for a premium decrease of 65%. This is an enormous help to people supporting themselves and/or a family on only an unemployment check. Rick Jenkins, president of Emanon, stated that without this discount, an employee he let go would have been unable to afford the $980 monthly premium for insurance. After the discount, this former employee was responsible for only $343, a much more affordable amount. These premium discounts apply for nine months, giving individuals a hand in getting back on their feet. Don’t leave yourself open to the risks of being uninsured.


If you want to find out more about COBRA insurance coverage, go to the United States Department of Labor’s website set up to answer your questions. You’ll find premium reduction fact sheets, as well as information on who’s eligible and how to sign up for COBRA insurance coverage.


Go Health Insurance. 16 March 2009. 16 March 2009.

“FAQs About COBRA Continuation Health Coverage.” United States Department of Labor. 16 March 2009. 16 March 2009.

Jenkins, Rick. “Stimulus jobless benefits extend to small businesses.” 17 March 2009. 18 March 2009.