COBRA Health Insurance: What to Know & How to Save (2024)
COBRA Insurance coverage is not an insurance policy. COBRA insurance is an extension of your health insurance benefits when you are no longer employed. COBRA Insurance rules include being terminated from a job, going through a divorce, and becoming eligible for Medicare. You may be able to use COBRA coverage if you have become unemployed during the pandemic.
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Scott W. Johnson
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Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his...
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UPDATED: Jan 18, 2024
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
UPDATED: Jan 18, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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COBRA is not an insurance policy. It is a law that the federal government passed in 1986. COBRA helps individuals who have lost their jobs get medical care in spite of being unemployed. As part of the law, employees can still maintain the health insurance plan they had at their old jobs as long as they meet certain requirements.
However, it is important that individuals are able to pay the full premium in a timely manner. The law is an integral part of the Consolidated Omnibus Budget Reconciliation Act. This is where the name COBRA insurance comes from. COBRA insurance is available in all 50 states in the U.S.
Before you decide on COBRA, see if you can get a cheaper option for coverage on the open market. Compare health insurance quotes now.
Who is qualified to use COBRA insurance?
There are three stipulations that people need to understand to determine if they qualify for COBRA insurance. The first is the qualifying plan. Anyone working in a company with more than 20 employees qualifies for COBRA insurance.
A qualifying event refers to the manner in which the person lost his or her health insurance. Some qualifying events include termination, reduction in work hours, divorce or legal separation, loss of dependent status, and qualified employees becoming eligible for Medicare.
You can qualify for COBRA if you lost your job due to COVID-19 and you meet the other criteria.
Read More: How to Buy Health Insurance
A qualifying beneficiary refers to a person who can qualify for COBRA insurance other than the covered employee. This includes dependents.
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Who can benefit from COBRA insurance?
COBRA can be helpful in a number of situations. It generally acts as a stopgap option for those that are in between health plans and protects you from unexpected medical bills.
• Individuals with preexisting conditions without a new medical plan who are not considered eligible for PCIP insurance.
• Individuals who already have a job with insurance lined up but still need a short-term solution.
• People with ongoing medical needs who are over the age of 50.
• People who have plans to become pregnant or those with pregnant spouses.
• Individuals who take expensive prescription medications.
• People with past or existing health problems.
• Individuals who can pay their premiums and do not want to make changes to their coverage.
For most people, COBRA is not meant to be a long-term solution.
How much does COBRA insurance cost?
As a general rule, COBRA coverage is considerably more expensive than a regular health insurance plan. That’s why most people use it only when necessary.
People who are thinking about applying for COBRA insurance should also analyze their budgets. It is worth knowing how much COBRA insurance costs because it helps people determine how much they need to allocate for health coverage. There are three steps to calculating COBRA costs.
1. COBRA Election Form
Monthly premiums can be calculated using the COBRA election form. The form allows individuals to obtain information about the cost for each family member to maintain coverage. The amount for each family member enrolled in COBRA should be added and then multiplied by 1.02. A two percent administration fee should also be added.
2. Pay Stub
People who have a pay stub can also easily compute their COBRA health cost. The first thing to do is find the personal and employer monthly contributions to health insurance. These two numbers must be added together in order to obtain the premium’s full cost. The total amount should be multiplied by 1.02. The administration fee should also be added. The result serves as the final monthly premium cost.
3. Get In Touch With Former Employers
People without pay stubs or election forms should get in touch with their former employer to determine their monthly premium. It is important to specify which family members are signed up. It is also essential to find out whether or not the two percent administration fee has already been added.
How do people know if they can afford COBRA insurance?
Determining monthly COBRA insurance costs helps individuals find out whether or not this plan is for them. There are a few determining factors that people need to take into consideration such as their budget and current health needs. Before considering COBRA insurance, it is important to understand the different types of health insurance options.
It’s a good idea to look at some quotes for other types of health insurance options before you decide to enroll in COBRA.
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What are some alternatives to using COBRA?
There are several other options you can look into before you enroll in a COBRA plan. Since COBRA can be quite expensive, one of these other options may be more affordable.
• Individual Health Insurance
This health plan option is ideal for people looking for full PPO health insurance or HMO coverage. It comes with different price points and varying coverage levels.
• Private Family Health Insurance
This plan is best suited for families interested in getting comprehensive coverage from an HMO or PPO. This includes ongoing, preventive, and even emergency care. This type of plan resembles company-sponsored plans.
• Short Term Health Insurance
These plans offer short-term coverage as the name suggests. The coverage is limited to emergencies, and the plans also have very high deductibles. People who apply for these plans can cancel at any time.
• Catastrophic Health Insurance
These plans are also referred to as emergency plans. They have high deductibles and are ideal for people who want to get their medical emergencies covered. In spite of having high deductibles, they are affordable in most cases.
• High Deductible Health Insurance
These plans have a very high deductible before the coverage starts. However, they have very low-cost premiums. People who take this option will have to pay for their ongoing medical needs out of pocket.
• Pre-existing Condition Insurance
The plan is intended for individuals with preexisting conditions. This provides lower insurance costs than COBRA. In order to qualify for the plan, it is important to comply with the state’s requirements.
What should I know about COBRA and COVID-19?
In response to the coronavirus pandemic, the U.S. Department of Labor (DOL) and the IRS extended the deadlines for the enacting of COBRA benefits. The extension is to remain in place for as long as the government continues to declare COVID-19 a National Emergency.
You can use your COBRA benefits, as long as you meet all of the qualification requirements if you have lost your job (and as a result your health insurance) during the pandemic.
Before you pay for COBRA, see what other health insurance options are available to you. Enter your ZIP code to compare rates now.
Case Studies: Exploring COBRA Insurance in Real-World Scenarios
Case Study 1: John’s Employment Termination
John recently lost his job due to downsizing in his company. As a result, he lost his health insurance coverage. However, John was eligible for COBRA insurance and decided to opt for it to maintain his health coverage during this transitional period. With COBRA, he can continue to receive medical care without any interruption.
Case Study 2: Sarah’s Divorce
Sarah recently went through a divorce, and as a result, she lost her health insurance coverage that was provided through her ex-spouse’s employer. However, Sarah qualifies for COBRA insurance and has the option to continue her previous health insurance plan by paying the full premium. COBRA helps her bridge the gap until she finds alternative coverage.
Case Study 3: Mark’s Job Loss during the Pandemic
Mark lost his job during the COVID-19 pandemic. As a result, he also lost his health insurance coverage. Fortunately, COBRA coverage is available for individuals who became unemployed during the pandemic. Mark was able to secure COBRA insurance, ensuring that he continues to have access to necessary medical care.
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Frequently Asked Questions
What is COBRA insurance?
COBRA insurance is not an insurance policy but an extension of your health insurance benefits when you are no longer employed. It allows you to maintain the health insurance plan you had at your old job under certain circumstances, such as termination, divorce, or becoming eligible for Medicare.
Who is qualified to use COBRA insurance?
To qualify for COBRA insurance, you need to have been working in a company with more than 20 employees and experience a qualifying event, such as job loss, reduction in work hours, divorce, loss of dependent status, or becoming eligible for Medicare. Additionally, individuals who lost their jobs due to COVID-19 may also be eligible.
Who can benefit from COBRA insurance?
COBRA insurance can be helpful for individuals in various situations, including those with preexisting conditions who don’t have a new medical plan, individuals with ongoing medical needs over the age of 50, people planning to become pregnant or with pregnant spouses, those taking expensive prescription medications, individuals with past or existing health problems, and those who can afford the premiums and don’t want to change their coverage.
How much does COBRA insurance cost?
COBRA coverage is generally more expensive than regular health insurance plans. The cost of COBRA insurance can be calculated using the COBRA election form, pay stub information, or by contacting the former employer. It is important to consider the cost and your budget before enrolling in COBRA insurance.
How do I know if I can afford COBRA insurance?
To determine if you can afford COBRA insurance, you should consider your monthly budget and current health needs. It’s also recommended to explore other health insurance options and compare quotes to find the most suitable and affordable coverage.
What are some alternatives to using COBRA?
Before enrolling in a COBRA plan, you can consider alternatives such as individual health insurance, private family health insurance, short-term health insurance, catastrophic health insurance, high deductible health insurance, or pre-existing condition insurance. These options may offer more affordable coverage based on your needs.
Are you looking for free insurance quotes?
Your one-stop online insurance guide. Get free quotes now!
Secured with SHA-256 Encryption
Scott W. Johnson
Licensed Insurance Agent
Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.