How Does COBRA Insurance Work?

Article | June 2019

How Does COBRA Insurance Work?

COBRA insurance may provide you with temporary health coverage after you leave a job or due to another event that qualifies you. Understanding what COBRA insurance is and how it works, can help you better decide if it's right for you.

What is COBRA insurance?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It's a federal law that was created in 1985 that gives individuals who experience a job loss or other qualifying event the option to continue their current health insurance coverage for a limited amount of time. Employers outside the federal government with more than 20 employees are required to offer COBRA coverage to those who qualify.

How do you qualify for COBRA health insurance?

COBRA health coverage can only be used in certain situations. These situations are sometimes called, “qualifying events.” How do you know if you're eligible? COBRA eligibility includes:

As an employee:

  • You must have been employed and covered under an employer's group health plan.
  • You must have been laid off, fired, retired, or quit or had your work hours cut to the point that your employer is no longer required to cover you under a group health plan.

As a dependent:

  • If you are a dependent of someone who qualifies for COBRA based on the above, you may be eligible, too.
  • If you are a spouse who divorces or files for legal separation from the employee, you may qualify.
  • A spouse of an employee who dies, may also meet COBRA eligibility.

If you are unsure whether you meet COBRA eligibility requirements, you can contact your employer’s human resources department. You can also contact the insurance carrier for the health plan.

How does COBRA insurance work?

COBRA insurance extends your health plan coverage when an employer's plan ends:

  • Your employer, your insurance carrier, or both will give you information on COBRA coverage. Your insurance carrier is required to include COBRA rights information in your plan documents when you initially enroll.
  • You will have up to 60 days to decide whether you want to continue your health coverage under COBRA. If you don't elect it, your health coverage will end on the day that your employer's plan coverage ended.
  • If you elect to continue coverage under COBRA, it will start the day after your employer's plan coverage ends. It will offer exactly the same benefits you had under your employer's group plan. You can continue to see the same doctors and other providers and follow all the existing plan details.
  • COBRA coverage may last for 18 or 36 months. It depends on the type of qualifying event that made you eligible for COBRA.
  • COBRA may be terminated early if you don't pay your premiums or other fees for coverage. It may also be terminated if you get a job that offers health insurance coverage before it runs out.

To get the most out of your COBRA insurance make sure you read the details of your plan. If you have questions, contact your insurance carrier.

What does COBRA cover?

COBRA insurance covers you for the same benefits your employer’s health plan covered you for. COBRA doesn't cover supplemental coverage, such as disability, life insurance, hospital care insurance, or other types of voluntary coverage.

Is COBRA coverage expensive?

COBRA can be significantly more expensive than what you paid under your employer’s plan. Why? Under COBRA you pay 100% of the costs for the health plan. This includes any costs your employer previously helped pay. This extra cost can make this coverage more expensive for you, even though it’s the same health plan.

Is COBRA insurance right for you?

COBRA has pros and cons, depending on your situation. It provides you with the same coverage you had under your employer. This means you can keep your health insurance plan even after you leave a job. Do you expect to be out of a job for an extended period of time? If so, coverage under COBRA means you can continue to see your same doctors and receive the same health plan benefits. But COBRA may cost you a lot more and it’s available for a limited amount of time. It may be helpful to compare options, such as individual health insurance plans.

COBRA versus individual health insurance—which is better?

Buying an individual health plan is an alternative to COBRA. An individual plan is one you buy from a broker or insurance carrier or through a state or federal Health Insurance Marketplace. Under the Affordable Care Act (ACA), loss of a job and related health coverage qualifies you for special enrollment. This means you can shop for and purchase an individual health plan even when it’s not open enrollment time. Depending on your expected income, you may qualify for subsidies on an individual health plan, which could make it a less expensive option than a COBRA plan. You can shop, compare plan details, costs, and more to see if this is a better alternative than COBRA insurance. Visit if you need to find an individual health plan.

This information is for educational purposes only. It is not medical advice. Always consult your doctor for appropriate examinations, treatment, testing, and care recommendations.