How Does COBRA Insurance Work When Leaving Your Job?

If you’ve lost your job, you can keep your health insurance through COBRA. But even if it’s an option for you, keep in mind that it’ll cost you more than what you were paying as an employee. And you might not be able to afford it.

The law only applies to health insurance, as the Department of Labor clearly states, “Life insurance and disability benefits are not considered “medical care.” COBRA does not cover plans that provide only life insurance or disability benefits.”

If your former company had 20 employees or more in the year prior to your leave, the employer is generally required to offer the COBRA extension to families. Sometimes it’s called continuation coverage.

When you’re no longer employed or don’t meet the minimum requirements for coverage, you’re on the hook for the full cost up to 102% — what you paid and what your employer paid, plus a 2% administrative fee.

How to get COBRA when you leave your job

Your employer’s group health plan must be covered by COBRA or a qualifying event must occur. You’ll also need to be a qualified beneficiary of that event.

For instance, you’re facing a reduction in hours or you’ve lost your job through no fault of your own. If your spouse died and you got health insurance through their work, you’re a qualified beneficiary entitled to COBRA coverage.

You can contact your employer or former employer about the steps you need to take to ensure your coverage continues as long as you’re able to get it. If you’re entitled to COBRA, you have 60 days to choose whether to elect or deny continuation coverage.

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