Facts About COBRA Insurance After Being Fired

The Consolidated Omnibus Budget Reconciliation Act, commonly called COBRA, has provided temporary health coverage since 1986 for employees who lose their job-sponsored health insurance for a variety of reasons, including involuntary termination or the divorce or death of a spouse whose job provided health insurance. Workers who were fired may be eligible for COBRA insurance for up to 18 months. During the COBRA period, they pay group health insurance rates and continue to be covered by their former employer's health plan.

Notification Requirement

• Employers must notify their health care plan administrator within 30 days that an employee has been terminated. If the employee is eligible for COBRA coverage, the plan administrator must send him information and an election form within 14 days of receiving such notice. The employee must then elect COBRA coverage within 60 days. If he does not do so, he loses his eligibility for COBRA on the 61st day.

Limitation

• COBRA coverage generally ends 18 months after an employee's termination. However, workers who were fired may be entitled to extended coverage if they become disabled after losing their jobs. The employee must get a ruling from the Social Security Administration stating that he became disabled within the first 60 days of COBRA coverage. He can get this letter any time while he is covered, but must send it to the COBRA plan administrator prior to the expiration of his COBRA coverage.

Second Qualifying Event

• If an employee suffers a second qualifying event -- an event that would cause him to lose health coverage -- while he is covered by COBRA, he may be entitled to COBRA coverage for 36 months instead of 18 months. For example, if an employee's spouse receives COBRA benefits because her husband loses his job, and the couple divorces within 18 months, the spouse may receive COBRA benefits for an extended period of time.

Premium Payments

• Beneficiaries are responsible for paying for COBRA coverage. In most cases, the former employee must pay both her share and the employer's share of her health care coverage. However, workers who are fired or laid off may be eligible for a premium reduction. Those workers who qualify for a reduction pay only 35 percent of COBRA premiums for the first nine months of coverage. COBRA recipients are responsible for paying premiums regardless of whether COBRA sends them a monthly statement. Failure to pay can result in early termination of COBRA coverage.