COVID-19 has led to both a health and economic crisis for millions of Americans. During this challenging time, making decisions about your health care can be stressful. If you need coverage due to unforeseen work circumstances, you have health care options to keep you and your family covered as you look for other opportunities. There are several health insurance options for the unemployed
that can provide protection during a coverage gap. One of those options is COBRA. These answers to common questions about COBRA coverage may help you decide whether COBRA is an option for you.1
Q: What is COBRA?
A: The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides a continuation of group health coverage to workers affected by voluntary or involuntary job loss, a reduction in hours and certain major life events. If you lose health benefits under those circumstances, you have the right to choose to continue group health benefits through your existing group health plan for 18 or 36 months, depending on the event.
Q: How do you know if you are eligible?
A: You are eligible for COBRA based on:
- Your group health plan. The law typically applies to health plans sponsored by employers with 20 or more employees, or by state and local governments. If your employer closed or went bankrupt and no longer offers a health plan, then there is no COBRA coverage.
- Your qualifying event. This is what caused you to lose your health coverage. It also determines who qualifies and how long your group health plan must offer continuation coverage. COBRA-qualifying events for covered employees include:
- The termination of your employment for any reason other than gross misconduct.
- Reduction in your work hours.
- If you or your family members meet the qualifications as a beneficiary. You need to be part of your group health plan up to one day before a qualifying event. There may be other eligibility requirements.
Q: What health benefits does COBRA cover?
A: Your COBRA coverage should be the same as the previous group plan coverage before your qualifying event, and you:
- Keep the right to choose among different coverage options during open enrollment.
- Have the same copay requirements, deductibles and coverage limits.
- Follow the plan’s rules for filing benefits claims and appealing claim denials.
Q: How much will you have to pay?
It depends. COBRA continuation coverage is often more costly than what you paid as an active employee. That is because your employer no longer covers part of the cost. Under COBRA, you may have to pay up to 102% of your group health plan premium, including employee and employer costs, plus 2% for administrative fees.
Q. How is COBRA different from Medicaid?
COBRA is short-term continuation coverage for employees who have lost their health coverage under certain circumstances. Medicaid is the nation’s public health insurance program for people with low income or disabilities. It provides long-term care coverage for 1 in 5 Americans.2
If COBRA is too costly for you, you can apply for Medicaid. Visit Healthcare.gov
for more information about enrolling in Medicaid.
Dealing with a job change and health care decisions can be difficult, and you may have other questions. There are resources you can turn to for help. Talk to your benefits department or human resources representative to learn more about your options. You can also contact:
- The COVID-19 Coverage Option Hotline: 1-888-832-2583
- The Employee Benefits Security Administration (EBSA): dol.gov/agencies/ebsa or 1-866-444-3272
2 Rudowitz, R., Garfield, R., Kaiser Family Foundation: 10 Things to Know about Medicaid: Setting the Facts Straight (March 2019): kff.org.