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Know Your COBRA Rights
It’s important to know your rights under COBRA – and your responsibilities as well. There are certain procedures you must follow – or you could forfeit your rights to coverage. For example, if you fail to sign up within the initial election period, you’ll miss your opportunity to choose continued health coverage under your employer’s plan. And, if you don’t make your monthly premium payments by the specified date, your COBRA coverage will end.
That’s why, if you have a “qualifying event” and become eligible for COBRA, you need to have all the facts. To fully understand your rights and responsibilities, be sure to review the following Questions & Answers carefully. They’ll cover the basic points about COBRA, and identify other sources of information.
In deciding whether COBRA coverage is right for you, you’ll want to carefully review “Choosing COBRA: Important Things to Consider” at the end of this section.
Answers to Your Questions about COBRA
Is my employer required to comply with COBRA?
Are all employees eligible for continued health coverage under COBRA?
What is a “qualified beneficiary”?
When I or covered family members become qualified under COBRA, how do I find out about it and elect continued health coverage?
If I choose COBRA during the election period, when does my coverage start?
If I initially waive my right to COBRA coverage and then change my mind, can I still elect coverage?
If I choose COBRA, do I have to continue my coverage for the full coverage period?
Which plans are included under COBRA?
Can I and my eligible dependents choose coverage under just one health plan (such as medical), or do we have to elect continued coverage under all of the plans (medical, dental, and vision)?
If my spouse, dependent children, and I are eligible to enroll in COBRA, can my spouse or children enroll if I don’t elect coverage?
If I elect COBRA, can I choose a different plan from the one I had before?
Who pays for COBRA coverage?
How much are COBRA premiums?
When are premium payments due?
When does my COBRA coverage end?
What if my employer fails to comply with COBRA?
How can I get more information about COBRA?
Is my employer required to comply with COBRA?
Most employers that maintain group health insurance benefits for their employees are subject to the provisions of COBRA. The few exceptions include employers who had fewer than 20 full- or part-time employees in half of the previous calendar year; church-related plans; and federal government plans.
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Are all employees eligible for continued health coverage under COBRA?
You and your dependents must actually be enrolled in your employer’s health plan to be eligible for COBRA. If your employer has more than 20 workers, but doesn’t offer health coverage, or if coverage is offered only to certain groups of employees and you’re not included, then you will not be eligible for COBRA.
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What is a “qualified beneficiary”?
Under COBRA regulations, a qualified beneficiary is a person covered under the health plan on the day before a qualifying event, and eligible to elect COBRA after the event occurs. This individual may be an employee or the employee’s spouse or dependent child; a child born to, or placed in the home for adoption by, a former employee while covered under COBRA; and, in certain circumstances, a retiree or the retiree’s spouse or dependent child.
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When I or covered family members become qualified under COBRA, how do I find out about it and elect continued health coverage?
When you lose health coverage under your employer’s plan due to a qualifying event, your employer must provide you with a specific notice regarding your rights to continued coverage under COBRA. First, the employer will notify the health plan administrator within 30 days after your termination, reduced hours, or other event that causes you to lose health benefits. After that, the plan administrator must notify you, within 14 days, of your right to elect COBRA coverage.
If a family member loses coverage due to a divorce, legal separation, or a child’s loss of dependent status, then it is your or your family’s responsibility to notify the health plan administrator within 60 days of the event. In this case, too, the plan administrator has 14 days to notify you and your family members of your right to elect COBRA.
Once you receive notice of your right to COBRA coverage, you or your eligible family members must respond and elect coverage within 60 days from either the date of the written notification, or the day you lost coverage, whichever is later. This 60-day period is called the “COBRA election period.”
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If I choose COBRA during the election period, when does my coverage start?
When you elect COBRA, your coverage is retroactive. That is, your coverage will be effective from the date your coverage was lost under the health plan, and you will have no “gap” in coverage.
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If I initially waive my right to COBRA coverage and then change my mind, can I still elect coverage?
As long as the COBRA election period has not expired, you can change your mind, revoke your waiver, and elect COBRA coverage. But, your coverage will not start until the day you actually elect coverage. This means you will have a gap between the time you lost coverage and the date you elected COBRA. And, if you received medical services during that period, you will not be reimbursed for any claims.
Once you’ve waived coverage and the 60-day election period has ended, you cannot change your mind. You will have forfeited your right to elect COBRA.
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If I choose COBRA, do I have to continue my benefits for the full coverage period? You don’t have to stay on COBRA for any specific period. You can cancel your coverage at any time.
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Which plans are included under COBRA?
The health plans subject to COBRA (those you may elect to continue your coverage under), and plans that are not included, are shown below:
| Plans covered under COBRA |
Plans not covered under COBRA |
Medical, dental, vision, and prescription
drug plans |
Life, disability, and long-term care insurance plans |
| Drug and alcohol treatment programs |
Wellness programs |
Employee Assistance Plans (EAPs) that
provide medical care (such as counseling
or psychological treatment) |
EAPs that do not provide medical care |
On-site health care, including discount
or free medical services |
Medical savings accounts |
Section 125 spending arrangements
(cafeteria plans) in certain cases |
Workers Compensation |
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Can I and my eligible dependents choose coverage under just one health plan (such as medical), or do we have to elect continued coverage under all of the plans (medical, dental, and vision)?
If your employer offers separate health insurance plans, each enrollee may choose to continue any combination of coverages (such as medical and dental, or dental and vision) under COBRA. On the other hand, if your employer sponsors one plan with multiple health insurance benefits, you must elect all of the benefits or none.
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If my spouse, dependent children, and I are eligible to enroll in COBRA, can my spouse or children enroll if I don’t elect coverage?
Yes, each of your qualified dependents can enroll in COBRA regardless of your election decision. So, even if you decide not to elect COBRA, any qualified family member may choose to continue health insurance benefits under the employer’s plan.
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If I elect COBRA, can I choose a different plan from the one I had before?
The coverage you receive under COBRA must be the same as what you had before. Your employer is not allowed to let you choose another plan (such as a less expensive option).
But, if your employer offers an open enrollment period to active employees while you’re on COBRA, you will have the option to switch plans during that time. You may even add new dependents (such a newborn or new spouse) if your employer offers this option to employees.
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Who pays for COBRA coverage?
You or an eligible dependent who elects COBRA coverage pays the full premium for health insurance under the employer’s plan.
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How much are COBRA premiums?
For COBRA coverage, your premium amount can be up to 102% of the employer’s monthly cost from the health insurance carrier (that is, the full premium plus an administrative charge of 2%). During the 11-month disability extension period, COBRA premiums can be up to 150% of the employer’s monthly cost.
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When are premium payments due?
After you elect COBRA, you will have to pay the first premium within 45 days. This premium is likely to be high, since it covers the period beginning when your coverage was lost, to the end of the current coverage month.
After that, monthly premium payments are due on the first day of each month, and must be received within 30 days from the due date.
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When does my COBRA coverage end?
COBRA coverage ends when any of the following events occurs:
- You reach the last day of maximum coverage.
- Your premiums are not paid on a timely basis.
- The employer no longer maintains any group health plan.
- The employer goes out of business.
- You obtain coverage under another employer’s group health plan that does not contain any exclusion or limitation regarding preexisting conditions (eligibility under a spouse’s health plan does not count).
- You become entitled to Medicare benefits.
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What if my employer fails to comply with COBRA?
Because COBRA is a federal law, the U.S. Department of Labor has jurisdiction over issues of non-compliance. Employers that fail to comply with COBRA rules and regulations face heavy fines, as well as special taxes that may be assessed by the IRS.
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How can I get more information about COBRA?
If you’d like to learn more about COBRA, call customer service at (407) 333-0088, weekdays from 9:00 a.m. to 5:00 p.m. Also, to access additional information available from the Department of Labor, just click here.
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Choosing COBRA: Important Things to Consider
Electing, or declining, health coverage under COBRA is an important decision. Here are some of the things you’ll need to consider in deciding whether to continue your coverage under COBRA.
- COBRA Costs – You may think that, because you’re just continuing the same health coverage you had before, your costs under COBRA will be the same. Unfortunately, for most COBRA participants, that’s not the case.
Generally, you’ll find that health insurance premiums under COBRA are more expensive than your cost for coverage as an active employee. That’s because the employer usually pays a substantial part of the premium for active employees, while COBRA participants generally pay the entire premium themselves. (And, if your coverage is extended due to disability, you may have to pay even more.)
- Coverage for Pre-existing Conditions – If you or a covered family member has a serious illness or medical condition (such as diabetes), for which you’ve received treatment under your employer’s plan (called a “preexisting condition”), COBRA coverage may be even more important to you.
A federal law known as HIPAA (Health Insurance Portability and Accountability Act of 1996) guarantees that an individual with a preexisting condition, who has had continuous health coverage for 12 months, can leave a job and not be turned down for health insurance at a new job. But, if you’ve had a break of 63 days or more, during which you had no health coverage, your new employer’s plan can refuse to cover any preexisting condition for up to 12 months. This means you would be responsible for all medical costs incurred to treat your diabetes (or any preexisting condition) for up to a full year before the plan would pay any expenses.
Clearly, if you have a serious medical condition, you may not want to risk going without coverage until you find another job. You’ll want to weigh this issue carefully in making your COBRA decision.
- Individual Health Plans – Certainly, you should look at other types of health insurance that may be available to you on your own. Consider the cost, scope, and level of coverage you’ll get under COBRA compared with that of any other type of health plan. And, be sure to ask whether the plan excludes any preexisting conditions.
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You’ll usually find that coverage similar to what you’ve had with your employer will cost even more when you purchase it on your own. But you may be able to obtain another type of insurance (for example, under an HMO or with catastrophic coverage) at a lower price.
To find out about a low-cost alternative to COBRA, which may provide the temporary health insurance coverage you need, click here.
COBRA offers valuable protection for people who might otherwise be without health insurance benefits. Be sure to consider all the issues, and any alternatives, carefully before you make this important decision. Your choice can have a real impact on the health and financial security of you and your family.
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