What You Should Know About COBRA Insurance

Health Coverage After Being Laid Off

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COBRA insurance may be an option for health care coverage if you have been laid off. If your former employer has 20 or more employees, the company is required by a 1986 federal law to offer you the option to pay for an extension of your health insurance coverage for at least 18 months. This law is known as COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act.

At the time you are laid off, your employer must inform you in writing about your rights under COBRA.

You then have 60 days from the date of the notice or the date your health insurance ended to enroll or sign up for coverage under COBRA. If your company went out of business or went bankrupt, COBRA will not be available.

Will COBRA Change Under Health Reform?

The Patient Protection and Affordable Care Act signed into law in March 2010 addresses access to health insurance coverage and assures that all Americans who need coverage will be able to get health insurance. The legislation does not make any changes in COBRA. However, as of 2014, you can purchase insurance in health insurance exchanges in your state or region.

How Much Does COBRA Cost?

When you sign up for COBRA, you will continue to have similar health insurance and the same health plan benefits that you had while employed. However, you must pay the health insurance premium that you paid before you were laid off plus the amount your former employer was paying for you.

The employer may also add a two percent administrative fee.

Depending on your individual circumstances, COBRA can be very expensive. If you are getting coverage for yourself, you may have to pay up to $400 per month; family coverage may be more than $1000 per month. These amounts will vary depending on the benefits provided by your employer's health plan.

What If I Can't Afford the Monthly COBRA Premium?

A grand every month is a lot of money and probably more than you expect to pay, especially if you also lost your income and are collecting unemployment insurance. For some workers, the COBRA payments can amount to more than 60 percent to 70 percent of their monthly unemployment check. Many laid-off workers who are eligible to continue their health insurance coverage through COBRA cannot afford to do so.

If you cannot afford COBRA, there may be other health insurance options that will provide the health coverage benefits that you need for you and your family. If you have been laid off, read more about your health insurance options.

Where Can I Get More Information About COBRA? 

COBRA is regulated by the U.S. Department of Labor. The department's website has a list of frequently asked questions about COBRA. You also can call 866-444-3272 for information or assistance.

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