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How Does COBRA Insurance Cover Workers Between Jobs?

One of the most devastating effects of being laid off can be the loss of health insurance for you and your family. Health insurance coverage can be expensive and difficult to qualify for. COBRA insurance allows you to keep your employer-sponsored healthcare coverage for a period of time -- even if you are no longer working for the company. COBRA benefits can provide you with up to 18 months of health insurance coverage.

  1. Definition of COBRA

    • The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows you to continue receiving group healthcare coverage after you experience what is called a "qualifying event." Such events include losing your medical coverage because of a voluntary or involuntary job loss; a reduction in the number of hours worked; or a death, divorce or other major life event. In addition, COBRA protects your health insurance when you are in between jobs, so you don't have to worry about losing your insurance while you search for work.

    Who is Qualified

    • You must have worked for an employer who has a group healthcare plan for more than 20 or more employees to be eligible for COBRA coverage. Your termination or separation from your job must have been for a reason other than gross misconduct; if you were fired for stealing, sexual harassment or another form of gross misconduct, you won't be able to get benefits. To be eligible for COBRA, you must have been enrolled in your former employer's health insurance plan before you left your job.

    The Election Form

    • Your employer is required to notify its healthcare plan administrator of a qualifying event within 30 days of your job loss. The plan administrator must send you an election form within 14 days. In other words, you may have to wait up to six weeks to get your election form. However, the insurance is backdated to the day you left your job, so you don't have to worry about a gap in coverage.

    Electing COBRA Benefits

    • Once you have received the COBRA notice in the mail, you must submit the election form to the plan administrator within 60 days. The plan administrator notifies you of the premium cost, which you should pay and submit with your election form. You will receive a new healthcare card from the plan provider. To continue coverage, you must make premium payments on time and according to your plan guidelines.

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