How to Elect COBRA Health Coverage After Losing Your Job or Having Your Hours Cut

When does losing your job or having your hours cut qualify for COBRA?

COBRA continuation coverage can apply when termination of employment or a reduction in work hours causes you to lose coverage under a covered group health plan. Job termination can be voluntary or involuntary, but termination for gross misconduct is excluded from the qualifying-event rule.

Three conditions generally have to come together: the group health plan must be subject to COBRA, a qualifying event must cause a loss of coverage, and the person seeking continuation coverage must be a qualified beneficiary for that event.

Federal COBRA generally covers private-sector employer plans when the employer had at least 20 employees on more than half of its typical business days in the previous calendar year. Full-time and part-time employees count, although part-time employees are counted as fractions of full-time employees under the federal rule. COBRA also applies to state and local government plans. Federal government plans and plans sponsored by churches and certain church-related organizations are outside federal COBRA.

If your employer is too small for federal COBRA, check whether your state has a continuation-coverage law sometimes called mini-COBRA. State rules are not uniform and are separate from the federal procedure described here.

When should you receive the COBRA Election Notice?

For termination of employment or a reduction in hours, the employer generally has 30 days after the qualifying event to notify the group health plan. After the plan administrator receives notice of a qualifying event, it generally must provide the qualified beneficiaries with a COBRA Election Notice within 14 days.

If the employer is also the plan administrator, the applicable combined timing can be up to 44 days after the qualifying event, or after the loss of coverage when the plan provides that continuation coverage begins on the date coverage is lost.

The Election Notice should identify the plan and COBRA administrator, the qualifying event and qualified beneficiaries, explain how to elect coverage, state when ordinary coverage ends, describe the continuation coverage and its duration, and explain premium amounts or payment requirements, due dates and grace periods.

If you believe you should have received an Election Notice after losing job-based coverage but it has not arrived, contact the employer's benefits office or plan administrator rather than waiting until a deadline becomes difficult to resolve.

How long do you have to elect COBRA?

The plan must give each qualified beneficiary an election period of at least 60 days. The period starts on the later of:

• the date the COBRA Election Notice is provided; or
• the date the qualified beneficiary would otherwise lose coverage because of the qualifying event.

Follow the election method stated in your notice. There is no single federal COBRA enrollment website for private employer plans; elections are handled through the group health plan or its COBRA administrator, and the available submission method depends on that plan's procedures.

If you waive COBRA during the election period, federal rules allow you to revoke that waiver and elect coverage before the election period expires. The coverage start date in that situation can depend on the plan rules described by the Department of Labor.

Can your spouse or children elect COBRA without you?

Yes. Each qualified beneficiary has an independent right to elect COBRA. A former employee can elect continuation coverage while a spouse or dependent declines it, or a spouse or dependent can elect even if the employee does not.

The plan must also allow a covered employee or spouse to elect continuation coverage on behalf of other qualified beneficiaries affected by the same event, subject to the plan's election procedures. A parent or legal guardian can elect for a minor qualified beneficiary.

This matters when family members have different health needs or access to different replacement coverage. Do not assume that declining COBRA for yourself automatically eliminates an eligible spouse's or child's independent choice.

How much can COBRA coverage cost?

COBRA usually becomes substantially more expensive than the amount deducted from your paycheck because you can be responsible for both the employee share and the amount the employer previously contributed. The maximum COBRA premium generally cannot exceed 102% of the plan's total cost for similarly situated individuals. That can represent the full employee and employer portions plus a 2% administrative charge.

An employer may voluntarily pay part or all of the COBRA premium, including as part of a severance arrangement, but federal COBRA generally does not require the employer to continue its contribution.

Different premium rules can apply to an 11-month disability extension. When the disabled qualified beneficiary receives coverage during that extension, the plan may charge up to 150% of the applicable plan cost for the additional months.

When is your first COBRA payment due?

You cannot be required to pay the premium at the moment you elect COBRA. The plan must give you at least 45 days after the election to make the initial payment.

Because continuation coverage generally reaches back to the date the previous group coverage was lost when COBRA is timely elected and paid, the first payment can cover more than one month of premiums. Follow the exact amount and payment instructions in your Election Notice.

If you make no initial payment before the end of the applicable 45-day period, the plan can terminate your COBRA rights.

What happens with later monthly premiums?

The plan must allow premiums to be paid monthly, although it may permit other payment intervals. After the initial payment, the plan must provide a grace period of at least 30 days for each payment.

Do not rely on receiving a monthly bill. Federal guidance states that a plan is not required to send monthly premium notices, so you are responsible for tracking due dates. Failure to make full payment before the applicable grace period expires can result in termination of COBRA coverage.

How long can COBRA last after job loss or reduced hours?

For termination of employment or a reduction in hours, COBRA continuation coverage is generally available for up to 18 months. Certain circumstances can extend continuation coverage, including qualifying disability rules or a second qualifying event affecting family members.

COBRA can also end before the maximum period in circumstances allowed by federal law, including failure to pay premiums on time or termination of the employer's group health plan. If continuation coverage is terminated early, the plan must provide a notice explaining the termination date, the reason and any applicable rights to alternative coverage.

Should you compare COBRA with a Marketplace plan before electing?

Yes. Losing job-based health coverage can also create a Health Insurance Marketplace Special Enrollment Period. HealthCare.gov states that you generally have 60 days after losing job-based coverage to enroll in a Marketplace plan. Depending on household income and other eligibility factors, Marketplace financial assistance may affect the cost comparison.

COBRA and Marketplace enrollment are separate choices with separate rules. COBRA can be useful when keeping the same employer plan, provider network or existing plan benefits matters, while a Marketplace plan may have a different premium, network, deductible and coverage structure.

If you need the separate Marketplace route rather than COBRA, see how to enroll in Marketplace health insurance after losing coverage.

Be careful about voluntarily ending COBRA after your Marketplace Special Enrollment Period has passed. HealthCare.gov states that voluntarily dropping COBRA or simply stopping premium payments does not by itself create a new Marketplace Special Enrollment Period. Exhausting COBRA or losing it for another qualifying reason can produce a different result.

What should you verify before you elect coverage?

• Confirm the date your active employee health coverage ends.
• Check that every family member who should be a qualified beneficiary is identified correctly.
• Read the exact election deadline and submission instructions in the Election Notice.
• Check the monthly premium and whether any employer severance contribution applies.
• Confirm where and how the initial payment must be made.
• Compare other coverage before their enrollment windows expire.
• Keep a copy of the election and evidence showing when it was submitted.
• Record the initial-payment deadline and later premium due dates.

What if you do not receive COBRA or the plan denies coverage?

Start by contacting the plan administrator or the benefits office identified in your plan documents. The Summary Plan Description and COBRA notices should explain the plan's procedures and contact information.

If a plan determines that you are not entitled to COBRA after receiving a qualifying-event notice or request for continuation coverage, federal rules require a notice of unavailability explaining why coverage is unavailable, generally within 14 days after the plan receives the relevant notice.

For private-sector employer plans, the U.S. Department of Labor's Employee Benefits Security Administration administers federal COBRA requirements under ERISA. State and local government COBRA requirements are administered federally through the U.S. Department of Health and Human Services. The federal COBRA rules described here should also be distinguished from any state continuation law that may apply to smaller employers.

What other benefits may need attention after losing your job?

Health coverage is only one part of a job transition. If you also lost employment and meet your state's requirements, the application process for unemployment compensation is separate; see how to file for unemployment benefits after losing your job.

If your loss of employment involved an unresolved federal minimum-wage or overtime issue, COBRA does not resolve that dispute. The separate process is explained in the federal wage complaint procedure.