Navigating the System: When You’re Between Jobs
COBRA and the Affordable Care Act
If you are like a lot of employed people, you may be reluctant to leave your current job—no matter how tedious and unfulfilling—because you fear losing your health insurance. But moving on does not necessarily mean doing without coverage. If you have a spouse whose employer provides health coverage, you may have the opportunity to enroll in his or her plan. If you are a dependent child, you may be able to enroll in a parent’s plan.
You can also buy an individual health insurance policy during the interim, but these policies can be expensive. Fortunately, the Consolidated Omnibus Budget Reconciliation Act (COBRA) gives certain employees the right to temporarily continue their health coverage after leaving their job.
COBRA was passed by Congress in 1986. It requires most group health plans to provide members with a temporary continuation of their coverage under certain circumstances, including a transition between jobs, unless the job was terminated due to gross misconduct. Group plans are required to offer continuation coverage when the plans are sponsored by state and local governments or private-sector employers with 20 or more employees.
If you elect continuation coverage, you are required to pay the full cost of the plan. Since your previous employer probably contributed substantially to this cost, your premium is going to be significantly higher after you leave. Still, premiums under COBRA are usually less expensive than if you were to buy an individual policy.
Learning About Benefits
All members of your family who were covered by your employer’s plan are eligible for continuation coverage, as well as any child born or adopted during the period of COBRA coverage. You will be able to receive coverage similar to what you received while employed.
You are eligible to continue receiving COBRA coverage for up to 18 months following termination of your job—longer under certain circumstances. You will have the opportunity to make the same choices as non-COBRA plan members during any open enrollment periods that occur during this time. At the end of your COBRA coverage, you may have the opportunity to convert to an individual policy.
Your former employer will give you a notice about your rights under COBRA when you are no longer eligible to receive health coverage as an employee. Employers are required to notify the health plan’s administrators within 30 days after a COBRA qualifying event (layoff or voluntary job termination). You then must send your own notification to the administrator no later than 14 days after your former employer’s notification.
After that, you will have 60 days to decide whether to elect COBRA coverage or not, and another 45 days after that to pay your initial premium.
Once you have elected to receive COBRA coverage, contact an administrator of the health plan to find out how you will file a COBRA claim for benefits. To make sure you continue receiving COBRA coverage, you should pay your premiums in full on a timely basis, and promptly pay any co-payments and deductibles you owe.
The Affordable Care Act (ACA) went into effect in early 2014. The law allows for Americans who were previously uninsured to get insurance. Choices of coverage and premiums are offered through the Health Insurance Marketplace. Insurance is offered through private health insurers where you choose the level of coverage you need. Take some time to research plans, including out-of-pocket expenses, deductibles, participating doctors, dental care, and coverage areas.
If you have it, you can keep your COBRA coverage however, you may find more affordable options in the Marketplace. If you need additional coverage or qualify for other government programs, such as Medicaid or Children's Health Insurance Program (CHIP), the Marketplace will share your information with the appropriate agencies for follow-up.
America’s Health Insurance Plans
US Department of Labor
An employee’s guide to health benefits under COBRA. US Department of Labor website. Available at: http://www.dol.gov/ebsa/pdf/cobraemployee.pdf. Updated September 2015. Accessed May 19, 2016.
Continuation of health coverage-COBRA. US Department of Labor website. Available at: http://www.dol.gov/dol/topic/health-plans/cobra.htm. Accessed May 19, 2016.
Coverage options if you lose your job. Health Care website. Available at: https://www.healthcare.gov/blog/coverage-options-if-you-lose-your-job. Updated July 11, 2014. Accessed May 19, 2016.
FAQs for employees about COBRA continuation health coverage. US Department of Labor website. Available at: http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html. Accessed May 19, 2016.
Last reviewed May 2016 by Michael Woods, MD Last Updated: 7/23/2014