Understanding COBRA Health Insurance

Learn how long the continuing coverage lasts—and what it might cost you.

The Consolidated Omnibus Budget Reconciliation Act is a federal law passed in 1986. It requires companies with 20 or more employees to continue offering health insurance at group rates to former employees and their family members after they’re no longer eligible for the group — because of job loss or divorce, for example. Some states have similar rules for companies with fewer than 20 employees.

Former employees, spouses, former spouses and dependent children are eligible, regardless of their health. There are exceptions: You cannot get COBRA if your employer no longer offers health insurance to current employees. You’re also out of luck if the company goes out of business. Federal employees are covered by a law similar to COBRA.

COBRA provides up to 18 months of coverage from the time you leave your job or drop to part-time status. The coverage lasts up to 36 months after you no longer qualify as a dependent on an employee’s policy. That includes, for example, a child who reaches the cutoff age for coverage or a former spouse who gets a divorce from the employee.

Probably more than you expect. You have to pay the employee’s and the employer’s share of the premium — or an average of $12,680 for families this year — plus up to 2% in administrative costs. But legislation Congress passed earlier this year provides a 65% COBRA subsidy for up to nine months for people who lose their job between September 1, 2008, and December 31, 2009.

You can’t be rejected or charged more under COBRA because of your health, so it’s a good deal for people with medical conditions who might otherwise have a tough time finding affordable insurance. But if you’re healthy and live in a state with a competitive health-insurance market (which includes most states other than New York and New Jersey), you may find a better deal on your own. You can search for individual policies at Ehealthinsurance.com.

7 Replies to “Understanding COBRA Health Insurance”

  1. NPR today had a woman with 2 small children whose monthly premium is $2039.00/ month…who the hell can afford that! You Cobra people are absolutely out of your minds! No Government subsidy for you profiteering cocksuckers, thats for sure!

  2. What about an employee who got disability through CA state EDD which pays $800.00 per month, and her employer offered COBRA continuity health insurance+ dental and vision for $507.00 per month. How could this person now live with $300.00 a month?

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