When Let Go From a Job, Does the Company Have to Offer You COBRA Insurance?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires that some employers offer an extension of health insurance benefits when a worker is let go from a job or or has work hours reduced. The coverage must be the same as that offered to employees who are still working. One disadvantage is you may have to pay the total premium. However, this is often cheaper than purchasing an individual health insurance policy.

What Companies Offer COBRA

• Any company with 20 or more full-time or part-time employees must offer an extension of health insurance coverage. Some church-related employers are exempt, and federal government employees are not covered, although federal employees have continuation coverage under another law. However, state and local governments must offer COBRA to employees. Companies with fewer than 20 employees do not have to offer COBRA.

Who is Covered?

• A qualified company should offer insurance coverage whenever certain events occur. When a company lets a worker go or reduces hours, it must offer COBRA. Upon death of a covered employee, the worker's family may also purchase COBRA insurance. A dependent child may opt for COBRA coverage on the parent's employer. In case of divorce, the spouse may purchase COBRA coverage. The insurance cannot exclude qualified beneficiaries, including the worker, spouse and dependent children, due to a preexisting condition.

Included Benefits

• When the worker is let go from a job, the company must offer the same health insurance benefits as those offered to current employees. During annual enrollment, the worker can choose from the same menu choices as current employees.

Your Responsibilities

• In order to take advantage of COBRA coverage, you must notify the administrator of the plan or your employer within 60 days of the time of your work termination. You must then pay your first premium within 45 days and continue to pay each premium on time.

When does COBRA Insurance End?

• COBRA insurance should cover you for 18 months. If your past employer goes out of business or otherwise ends the health insurance coverage for employees, your COBRA will end. Your COBRA insurance should terminate if you obtain other group health insurance. If you become eligible for Medicare benefits after electing COBRA, your insurance may terminate. Some companies may choose to allow you to continue your COBRA coverage; however, they are not required to do so. If you become disabled during the first 60 days of coverage, you may qualify for an extra 11 months of continuing coverage. You must prove your disability by submitting a letter from the Social Security Administration. Your cost may increase to 150 percent of the premium.