Does COBRA Credit Apply If You Are Fired?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) ensures that those who lose employment will still be able to receive health insurance. It is available to most people who are fired, though there are some exceptions. If you've been fired, it's smart to look at all of your options before you make a decision.

COBRA Rules

• When you lose employment, whether you quit or are fired, you are usually eligible to receive COBRA benefits, with two major exceptions. The first is if the company fired you for gross misconduct. This might include stealing from the company, coming to work drunk or getting in a physical fight with another employee. Additionally, companies with fewer than 20 employees do not have to provide COBRA benefits, though some states require a similar plan, often called a "mini-COBRA."

How You WIll Know

• When you are fired, you will probably have an exit interview with a human resources manager. In this meeting, she will present you with information about the COBRA plan. If you do not receive this information, you probably do not qualify. However, you can ask the human resources department if you want to be sure.

COBRA Basics

• When you accept a COBRA plan, you are able to continue the same coverage that you had while you were an employee. Unfortunately, the company is no longer paying the brunt of your premium -- you're responsible for the entire payment. You may be shocked by how much this is -- premiums can be anywhere from several hundred dollars to over a thousand dollars, depending on the type of plan you had through your employer.

Alternatives

• If you don't qualify for COBRA or if you feel that it's too expensive, you still have options. Talk to local health insurance companies about an individual plan. In some cases, the premium may be higher than your COBRA payment would be, but there is often more flexibility -- you might be able to take a higher deductible or forgo prescription coverage to reduce payment. If you're married and your spouse's employer offers a plan, you can ask the company to add you to the plan. You'll have to pay a small amount for this, but it's less than COBRA or individual coverage.