• David Bryant

How does COBRA insurance work?

COBRA is a federally required rule that allows people to continue their group sponsored health insurance programs after leaving an employer.


Some states also have a state continuation program (ex Cal-Cobra, Mini Cobra, etc)

Once you are terminated (voluntarily or involuntarily), the insurance company will be notified. Most (not all) companies terminate your health insurance at the end of the month following your last date of employment. Once the carrier has been informed of your final date of employment they start work on removing you from the plan. You then have 60 days from your date of termination to elect cobra and pay any outstanding premiums since your last month of employment.


Many companies employ a Third Party Administrator (TPA) to send you the required cobra notices and collect and remit your payments. You must be notified of your plan costs in this 60 day time period and be allowed to keep your plan.


Federal cobra lasts for 18 months. Some states with continued cobra (usually for smaller employers) will offer an extra 18 months.


The cost of your cobra will be the full cost of your plan (no more company contributions to it) and usually an extra 2% processing fee. When people say cobra is expensive it’s usually because they never knew the full cost of the plan and didn’t see that their employer was paying at least $100 or 50% of the employee portions cost (they are required to contribute at least this much to sponsor group coverage) often times they contribute significantly more.

During this 60 day window to elect to continue your plan under cobra, you may also qualify for a qualifying event under Affordable Care Act guidelines to purchase new insurance on the individual/family market either directly from a carrier or through your state or federal marketplace (eg http://CoveredCA.gov or Get 2020 health coverage. Health Insurance Marketplace). You do not need to keep your cobra plan. If you have ongoing advanced care needs you may want to seriously look at keeping your plan since group plans usually have larger networks of physicians (not always) and making sure all of your providers are covered as in-network on an individual market plan could be tricky for some.


Independent Brokers often are there to help walk you through these options. Disclaimer, they are free for you to use (or should be!) but only make money if you buy a plan through them so calling one and asking for them to help you understand cobra may not always work well, but they will certainly help you with finding a new plan to meet your needs you could compare to your cobra option. You can also contact your former employer and ask for the contact information for their broker to assist with cobra education needs.