Your COBRA Options
If you lose your job or switch employers, you have the right to carry your group health insurance coverage with you to a new job for a period of time under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
COBRA generally requires that group health plans offered by employers with 20 or more employees to allow employees and their families the opportunity for a temporary extension of health coverage. COBRA gives workers and their families who lose their health benefits the right to continue their group health benefits under certain circumstances such as job loss, reduction in working hours, transition between jobs, death, divorce and other life events.
However, COBRA qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan. Oftentimes, that premium is significantly higher than it would be for an identical individual plan from the same health insurance carrier.
Insurance experts say competition is one of the main reasons for this discrepancy. Health insurers can expect more competition, and therefore respond with lower rates, when it comes to the individual health market than the group market.
Luckily, as a COBRA qualified individual, you have several other options. One such option may be “special enrollment” into other group health coverage. Under the Health Insurance Portability and Accountability Act (HIPAA), if you or your dependents lose health insurance coverage, you may have the right to special enroll in other group health coverage, even outside of open enrollment. For example, an employee losing eligibility for group health coverage may be able to special enroll in a spouse's plan. A dependent losing group health coverage may be able to enroll in a different parent's group health plan. To qualify for special enrollment, you or your dependent must have had other health coverage when you previously declined coverage in the plan in which you now want to enroll. You also only have 30 days from the time you lost coverage to request special enrollment.
Another coverage option is to buy individual health insurance. If it’s outside the open enrollment period (from Nov. 15th through Feb. 15th), you’ll need to prove you have experienced a Qualifying Life Event, such as a loss of a job or the death of the person whose group coverage you were under.
If you or your dependent chooses to elect COBRA continuation coverage instead of special enrollment, you will have another opportunity to request special enrollment in another group health plan once you have exhausted your continuation coverage. In order to exhaust COBRA continuation coverage, you or your dependent must receive the maximum period of continuation coverage available without early termination. You must request special enrollment within 30 days of the loss of continuation coverage.