What does COBRA Insurance stand for?

COBRA Health Insurance stands for the Consolidated Omnibus Budget Reconciliation Act.

What is COBRA Insurance?

COBRA Health Insurance essentially allows for certain employees to continue to receive their health coverage even after leaving the company. This monumental act was passed in Congress in 1986 and was officially helmed by Ronald Reagan. It ushered in sweeping changes to the health care sector by amending the Employee Retirement Income Security Act, the Internal Revenue Code, and the Public Health Service Act.

COBRA Insurance Rules: How does COBRA Insurance work? 

As previously mentioned, COBRA rules in 2020 essentially extend an employee’s job-based health insurance plan after they’ve left the organization. This provides the opportunity to continue receiving health coverage at the lower group rates for a duration of time. COBRA health insurance is available for individuals who get laid off or get their hours reduced. Although, there are some cons to COBRA, so let’s break down the facts.

Employees who leave the company have to pay the full price of the monthly premium, which can be rather costly. This is due to the fact the company usually pays part of the premium, but the individual is now responsible for paying the full amount. There is a silver lining though, as COBRA rates in 2020 are usually less than individual short-term plans available in the private marketplace.

Is every employer required to provide COBRA?

Yes, most plans are covered. According to the Department of Labor, COBRA health insurance applies all employers with more than 20 employees “on more than 50 percent of its typical business days in the last calendar year.” Both full and part-time employees are counted in regards to see if a plan is subjected to COBRA insurance costs in 2020. Although, part-time employees are counted as a fraction compared to their full-time counterparts. Plans that are sponsored by the federal government or by religious organizations do not apply.

How to get on COBRA Insurance

There are three aspects of qualifying for COBRA health insurance. You have the plans, qualified beneficiaries, and qualifying events. The program establishes specific criteria for each element.

According to COBRA insurance rules, a qualified beneficiary is someone who covered by a group health plan before a qualifying event occurs. This could be an employee, an employee’s spouse or an employee’s dependent child. Occasionally, a retired employee, a retired employee’s spouse or a retired employee’s dependent children can become qualified beneficiaries.

In essence, a qualifying event is merely an event that leads to an individual losing their health coverage. There are a number of different types of qualifying events. Each type of event determines who the qualified beneficiaries are, along with the time a plan must offer health coverage to them through COBRA.

COBRA continuation coverage & COBRA health insurance

Who Qualifies for Cobra Health Insurance?

To qualify for COBRA health insurance, you need to follow the following criteria:

  • Voluntary or involuntary termination of employment that does not involve misconduct
  • Reduction in the number of hours, which disqualify the employee from health coverage

Your spouse can qualify for COBRA health insurance according to the following criteria:

  • Voluntary or involuntary termination of the covered employee’s employment for any reason besides gross misconduct
  • Reduction in the hours worked by the covered employee below plan eligibility requirements
  • Covered employee becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

Dependent children are eligible under COBRA insurance rules under these guidelines:

  • Loss of dependent child status under the plan rules
  • Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee below plan eligibility requirements
  • Covered employee becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

How does COBRA Insurance work if I quit my job?

Regardless of the situation – whether you quit your job or your employment is terminated – you have the option to sign up for coverage according to government regulations.

Guaranteed Benefits with COBRA

Under COBRA health insurance, qualified beneficiaries are entitled to be offered identical coverage to what is available for similarly situated beneficiaries that are not under a COBRA health insurance plan. Any change in benefits to the plan for active employees would then result in a change to all qualified beneficiaries. As such, qualified beneficiaries must be given the opportunity to make the same choices just like the non-COBRA beneficiaries of the plan are given. One example is being given open enrollment periods by the plan.

How much is COBRA insurance?

COBRA Health Insurance Cost for 2020

The cost of COBRA health insurance in 2020 varies depending. The answer varies depending on your employer’s health insurance plan. In most cases, beneficiaries are required to pay for their own COBRA coverage. A premium cannot go over 102 percent of the cost of the plan when compared with an individual in a similar situation who did not have a qualifying event. This includes both the portion of the plan paid by employees and the portion of the plan the employer paid before the qualifying event, outside of the two percent administrative costs.

If a qualified beneficiary receives 11 months disability coverage extension, the premium for those additional months can be increased up to 150 percent of the plan’s total cost for coverage. While premiums may be increased in COBRA health insurance plans, this is typically fixed to each 12-month premium cycle.

As well, each plan must allow every qualified beneficiary to pay his or her premiums on a monthly basis if asked to do so. However, the initial payment must be made within 45 days of when the employee elected to COBRA insurance.

How long does COBRA Insurance last?

Each case is different, but COBRA health insurance generally provides 18 months of coverage from the time the individual has officially departed the organization or has had their hours reduced. This extends to the dependents who rely on the insurance.

Furthermore, if you’re disabled within the first 60 days while utilizing this resource, both you and your beneficiaries are eligible for up to 29 months of coverage. If the covered employee dies or there’s a divorce or legal separation while using COBRA insurance, the spouse and beneficiaries are eligible for up to 36 months of coverage, according to the Department of Labor.

COBRA Dental Insurance

In general, employers with at least 20 employees are required to offer COBRA coverage. COBRA insurance rules do not only apply to health coverage, but to dental and vision insurance as well. It is important to note, however, you will only be eligible for COBRA dental insurance if you enrolled prior to employment termination. This means that if you waived dental coverage with your employer, termination does not make you or your family eligible for CORBA. On the other hand, if your health insurance included dental as part of the plan, you will be required to continue both coverages, even if you only desire to continue one or the other.

Dental insurance afforded through COBRA is available for terminated employees who were offered only health insurance through their previous employer. The same rules that apply to COBRA health insurance also apply to COBRA dental coverage.

COBRA dental coverage may be provided for up to 18 months or until the beneficiary reaches the age of Medicare, whichever comes first. Coverage may be extended if it is determined you or your dependents are disabled under the Social Security Act provisions regarding disability. The determination of disability must occur within the first 60 days of COBRA dental coverage. If qualified, coverage may be extended for up to 29 months. After the continuation period has commenced and a spouse or dependent has another event that would entitle them to their own coverage, coverage may once again be extended. However, in no situation will a continuation of coverage last for more than 36 months from the first COBRA event that qualified for coverage.

The full monthly premium will be your responsibility, however. This includes any portion your employer may have paid previously as well as an administrative surcharge of 2%. Although you must pay for COBRA dental insurance, the premiums will likely reflect a group rate, making coverage more affordable than if you were to purchase a new dental insurance plan.

The exception, however, would be if coverage is extended beyond the initial 18 month period due to disability or a secondary qualifying event. If coverage continues beyond 18 months, you will be responsible for 150% of the premium. Payment is due within 45 days of first choosing to extend coverage. After that, insurance carriers provide for a 30 day grace period to make payments.

If you, as the employee, decide not to continue with COBRA dental insurance, your spouse, partner, or children can still purchase the coverage. Just like you, they will need to accept coverage within 60 days of the qualifying event. In addition, if any covered individual were to marry while covered, the spouse may be added at any time. Newborns may be added within 30 days of their birth.

COBRA insurance rules require the ability to convert your COBRA dental insurance to a direct pay individual or family plan. Benefits of the COBRA dental insurance program must be exhausted before conversion. If you do not make timely payments, cancel coverage, or let coverage lapse, eligibility for conversion is withdrawn.

COBRA and the Government

Numerous government agencies administered COBRA health insurance. For example, the Department of Labor and Treasury has jurisdiction over all the private-sector health plans and coverage. On the other hand, the Department of Health and Human Services controls the continuing coverage laws for the public-sector health plans and coverage.

The Labor Department is responsible for interpreting and regulating the disclosure and notification of COBRA requirements. The Internal Revenue Service (IRS), along with the Department of the Treasury has issued regulations on numerous COBRA provisions — most related to eligibility, premiums, and more.

Health Insurance Alternatives to COBRA for 2020

It’s important to weigh all of your options before deciding to utilize the resource. According to the Department of Labor, there possibly may be alternatives to COBRA in 2020 out there that suit your specific needs.

Purhcase a Health Insurance Plan

One alternative is to obtain a special enrollment, which means you could purchase a plan through the marketplace. Under the Health Insurance Portability and Accountability Act, if you (or your dependent) lost their health insurance, you can apply for special enrollment and can shop around for a plan. You have to apply for special enrollment within the first 30 days following your qualifying event, otherwise, you will be rejected and have to wait until the Open Enrollment Period. We always recommend using an insurance broker to help you shop around.

Marketplace plans can offer a wide range of cost-sharing reductions and tax credits, which can partially subsidize your monthly premium. This could potentially lead to substantial savings in the long-run and can be a viable alternative.

Utilize Your Spouse’s Plan

This is a great option if your spouse is employed and their company offers health insurance. In many instances, joining your spouse’s plan can save a lot of money in the long-run while you’re unemployed. It’s important to always check with your spouse first and calculate the cost of the monthly premium increase. Your partner’s coverage might differ from your old plan as well, so it’s best to read the fine print and fully understand the new conditions and benefits.


If you’ve lost your job and have had to sell some property, you may be eligible for Medicaid. This provides health coverage to low-income individuals who would otherwise be uninsured. Medicaid is controlled by each state but is federally regulated, meaning coverage and eligibility varies depending on where you live. You can always find out more information at HealthCare.gov to see if this is a viable option.

Trade Unions or Alumni Associations

A lot of individuals often overlook this option, but it’s always best to do a bit of research and make a few phone calls to see if this is available. Many college alumni associations do offer health insurance plans, meaning you can join their plan by simply paying a monthly premium. Several trade unions also provide the same coverage, meaning you can purchase insurance through your specific union. Several other options for different professions exist, so it’s always best to reach out to the union and ask a few questions.

Tax Credit

Depending on your circumstances, individuals who utilize COBRA health insurance may qualify for the Health Coverage Tax Credit (otherwise known as HCTC). According to the Department of Labor, those who are eligible for the HCTC tax credit include employees who’ve recently lost their job due to “the negative effect of global trade.” They also have to receive benefits under the Trade Adjustment Assistance (TAA) Program and receive pension payments from the Pension Benefit Guaranty Corporation (PBGC). Those who qualify for the HCTC can claim it on their income tax at the end of the year.

How does an individual file a COBRA claim?

In order to file a claim, your health insurance company has to provide an explanation on how to access benefits and how to process claims. According to the Department of Labor, you should submit a claim following these rules regulations.

COBRA Health Insurance doesn’t have to be complex

It’s important to understand the main COBRA guidelines in 2020, as this can be a great resource in the event you no longer have health insurance. We always recommend reading over the above information and contacting an expert within the industry to find the best solution for you or your family.

If you still have questions in regard to COBRA health insurance, give one of our licensed agents a call today at 1-855-881-0430. They’ll be able to explain all this information in great detail and be able to answer all of your queries.