COBRA Explained


The Consolidated Omnibus Reconciliation Act (COBRA) allows employees to remain under their employer-sponsored health plan in the event that they leave the job or have reduced hours that do not let them qualify for the coverage.

Employers with more than 50 full-time employees are required to offer health insurance and assist with monthly premiums. An employee becomes ineligible when they are let go or do not have the necessary number of hours. The COBRA program gives the ex-employee the option to stay with the health plan for a limited amount of time as long as they can take care of the premium payments on their own.

To qualify for COBRA, the ex-employee needed to have been enrolled in an employer-sponsored health plan the day before the qualifying event. Qualifying event meaning voluntary or involuntary job loss and a reduction of working hours that no longer allows them to qualify. Also, the health plan had to have been effective at least 50% of the business days the year prior. If the employer stops offering health insurance or goes out of business, the ex-employee will not be able to qualify for COBRA.

The main premise behind COBRA is that you remain on the same health plan as if you were still an employee of the organization. Therefore, any changes that the employer makes to the health plan will affect the ex-employee. Meaning that if the employer changes the health plan or stops offering it, the ex-employee will have to accept that. This is why continuing on COBRA may not be the best decision for everybody. It may no longer serve you or your family in the best way. There is a 60-day period in which you may choose to continue on your health plan and if you were to originally choose not to, you have those 60 days to change your mind. If you do join COBRA, you will be covered anywhere from 18 to 36 months depending on the qualifying event.

One of the draws of the COBRA program is that it is given at a group rate. And while that seems like a good deal, it may end up being quite expensive. That is because, with group insurance, your employer takes over the majority of the expense. Now the financial burden will be solely on the ex-employee. However, COBRA can sometimes be cheaper than some individual health plans. It is all about researching and finding the best plan that works for you.

COBRA is a good option for those that have lost their job or no longer qualify for health insurance because of lost hours. However, it can end up being too pricy to handle and it may not be the best plan for you or your family’s needs.

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We hope this information on COBRA explained is helpful. 

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About Kayla Gonzalez

Kayla is a graduate of Texas A&M University and joined the Empower Brokerage marketing team in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile

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