How Does Cobra Insurance Work?

Learn what cobra insurance is and make your unemployment phase easier.

Unemployment can cause a major setback in one’s finances after some amount of time. In such times, it can be extremely difficult to manage your expenses. These expenses can range from necessities to food, shelter, and even insurance. It might feel like things have gotten disrupted and you are losing everything but that shouldn’t be the case.

When you lose your job or quit, one would assume that you will be losing the insurance plan they offered you for your health but that can be altered. You can simply get cobra insurance and sort out that front without any worries or hassle. You must be aware of the details of cobra insurance. A lot of people tend to get confused about how it works. Down below, we have curated a guide to answering questions like when does cobra coverage start, how to get cobra insurance, cobra insurance rules, cobra coverage retroactive, and more.

What is Cobra Insurance?

Cobra is short for the Consolidated Omnibus Budget Reconciliation Act. The Cobra Insurance came into being in 1985. The purpose of Cobra Insurance was to make insurance obtaining easier for individuals who have either just quit or have lost their job due to being fired. Any individual who has recently become unemployed can have the same benefits that they were getting from their employer-provided health insurance. This is done with the help of Cobra Insurance. This is a federal law and is provided to ex=employees only for a certain amount of time.

Employers who are operating outside the federal government and have more than 20 employers are required to provide their employers with Cobra insurance coverage. It provides recently unemployed people a cushion for their health insurance purposes.

How Does Cobra Insurance Work If I Quit My Job?

With the help of Cobra Insurance, employees can continue the same health insurance plan that they were previously on even if they have decided to quit their job or if they were fired.

With the help of Cobra insurance, it is important to understand that they will receive the same resources that they had available previously. There will be no additional coverage provided by Cobra. Other charges and coverage such as hospital care insurance, disability insurance or life insurance, or even any other type of coverage are voluntary.

Opting for individual insurance instead of Cobra insurance is also an option. For individual insurances, there is also an opportunity for special enrollment in which individuals can opt to get an individual health plan even after the allocated time for enrollment ends. This insurance is available for employees for around 2 months after their termination usually but sometimes this coverage can be given up to 3 years.

An employer will have the opportunity to pay around 102% of the amount for the medical coverage for Cobra to cover. Sometimes though the person would be rewired to pay the employee’s portion and the employer’s portion as well. Moreover, they will also have to pay the administrative fee.

How To Get Cobra Insurance?

For all those who are wondering how to get cobra insurance, read on below to learn how to go through the process.

  1. First of all, your insurance carrier or your employer will provide you information based on Cobra coverage. The insurance carrier or employee will have to include cobra rights information in the documents when you enroll initially with the company or organization.
  2. Next up, you will have a time duration of 60 days. You can take this period to decide whether you want to continue your health insurance or coverage under Cobra or not. If you do decide to continue with the insurance then you can read onto the next few steps to see what to do next. If you do not decide to continue with the plan then your coverage or health insurance will come to an end on the exact day that your employer’s plan coverage ends.
  3. If you do decide to continue with the plan under Cobra then it will commence from the same day when your employer’s plan ends. You will be open to availing of all the same benefits that you were getting under your employer. There will be no additional coverage provided to you. You will have access to all the same resources that you were previously getting, meaning the same physicians, doctors, and all other details of the plan will remain the same.
  4. Once you attain Cobra coverage, you will have access to the coverage for around 18-36 months, this time duration will depend on the event that made you eligible enough to achieve Cobra coverage in the first place. You can talk to your insurance carrier or even your ex-employer to get more information about the duration of the plan.
  5. Lastly, it is important to keep in mind that Cobra shall be taken away from you if you fail to pay your fees for coverage or even if you don’t pay the amount required for premiums. This is an important point to note that any sort of neglect when it comes to the charges and payments will leave you stranded with Cobra coverage. Furthermore, this coverage will also be taken away from you and the contract will be terminated if you get a new job and they offer you health insurance. even if you might have not exhausted the Cobra coverage, it will still be taken away from you once you get your hands on a new health insurance opportunity.

Always stay in touch with your employer or your insurance carrier to get a grip on some of the finer details of the plan. They will be able to provide you with the most information regarding your coverage and it will also be the most accurate one.

The Duration of Cobra Coverage

People have been asking one question a lot which goes like, “when does cobra coverage start?” Well, the period for Cobra insurance as mentioned above depends on whether you want to avail of it or not. If you decide to avail it then Cobra insurance will start the exact next day when your previous employer-provided coverage comes to an end. Your employer or insurance carrier will have around 30 days to work on the information which is supposed to be transferred to you.

If your employment hours have ended or even if they have been reduced, the employer is required to alert the group health plan administrator in exactly 30 days. These 30 days start from the day when the employee is terminated, removed, or had hours lessened.

Cobra Coverage Retroactive

Individuals will have around 60 days to decide on their continuation or discontinuation. if you decide to continue with a Cobra coverage within the 60 days, before the completion of the 60 days, the coverage you opted for will be retroactive.

What if you have to keep in mind is that you will be required to pay retroactive premiums as well., what this means is that if medical bills are incurred by you during the period for election, you can then legally and retroactively choose Cobra and have those bills covered by Cobra coverage as well.  Also, if the employee who was removed isn’t eligible for it in the first place, the employer has the ability and right to cancel coverage retroactive to the original coverage date.

The coverage will be retroactive to you when you become eligible for Cobra but that will only work when you pay the premium retroactively

Cobra Insurance Rules

Cobra insurance cannot be availed by everyone. There are certain cobra insurance rules as well. Keeping those rules in mind, you can further navigate if the plan will work in your favor or not. Moreover, this insurance can also be taken away from you if you fail to comply with the cobra insurance rules. The rules include further points which you should be aware of such as the eligibility factors for Cobra.

  1. First off, to attain Cobra you need to be employed in the first place. Just being employed will also not do the job, you must be registered under your employer’s group health plan. This is the stepping stone for Cobra coverage as without it you can never have access to Cobra.
  2. Next, it is also crucial that to attain Cobra you should have been either fired, laid off, your hours could have been reduced or if you quit. These are the conditions on which you will be able to be eligible for Cobra coverage.
  3. You can also be eligible for Cobra if you are a dependent of someone eligible for Cobra.
  4. You can also avail of Cobra if you are a wife or a husband who files for legal separation or divorces from the employee, then as well you can be eligible for Cobra.
  5. Lastly, you can also be eligible and qualify for Cobra if you are the wife or husband of an employee who passed away.
  6. Cobra coverage will be taken away from you if you are fired based on misconduct and misdemeanor.
  7. Cobra insurance will also be taken away from you if you are employed again. Once you have a new employer, if the new job comes with further health insurance coverage, Cobra will be terminated for you.
  8. Not all employers are required by the law to provide their employees with Cobra. Any company or organization that has more than 20 employees will have to act upon it.

Is Cobra Insurance Affordable?

Cobra insurance might not be affordable for a huge population of people because it is expensive. When you are under your employer’s plan, this coverage can be more expensive for you. The reason for this is because when you are availing of Cobra you will be required to pay a total of 100% of the expenses and the costs of the plan for your health coverage. The cost that your employer would be paying beforehand will be then paid entirely by you.  The cost which will be added for you will then eventually end up making the plan even more expensive for you. This can be the case even if you are availing of all the same services.

A lot of people fail to understand that even if you are availing the same resources the plan will still cost you more because your employer will no longer be paying on your behalf and the entire load of the expenses, fees, and costs will be on your shoulders.

Should I Get Cobra or Not?

The deciding factor for Cobra is not one. You can think of Cobra only if you think you can manage the payments, administrative fees, and premium charges on time. otherwise, you will be removed from the plan and will avail nothing. talk to your employer or insurance carrier and let them bring you up to date on all the details required, the eligibility criteria, the rules, and then only proceed with the decision. This is why you are given a 60 day period to decide. Utilize this period, research, and plan accordingly.


Cobra coverage is a pretty great plan out there for anyone who doesn’t want to go through the trouble of getting new health insurance coverage immediately. With Cobra, every individual is given as much as 36 months and sometimes even 2-3 years to stabilize themselves. You might have lost your job but that doesn’t mean you should give up on the insurance as well. The only problem is that since it is costly it might not be the perfect choice for everyone. It would be very smart and efficient to another plan if you have a family or have other people depending on you.

Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

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