COBRA Insurance – The Basics

COBRA Insurance is a benefit for those who are changing jobs but currently have health coverage through their employer. COBRA Insurance acknowledges the fact that employees have a right to maintain their current health insurance coverage as long as they are willing to pay their premiums. Read our guide below for more information about how COBRA Insurance can help you.

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UPDATED: Jul 16, 2021

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Written By: Chris TepedinoReviewed By: Laura WalkerUPDATED: Jul 16, 2021Fact Checked

People who have health insurance provided by a current employer, and are considering a job change to a new employer, can use COBRA insurance coverage as a means of retaining the same health coverage in the interim. Even people that are self-employed can make use of COBRA insurance.

COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act; it recognizes the fact that employees have a right to maintain their current health insurance, as long as they are willing to pay the premiums.

Please note that in cases where the employer covers a portion of healthcare insurance costs, this amount will become the responsibility of the employee. This can result in significantly higher premiums, though the employee retains all of the benefits that they previously had.

COBRA is available for people up to 18 months after they leave employment. It is available for employees who leave a job of their own volition or are terminated for issues that are not related to gross misconduct.

It can even be used by employees who have had their working hours reduced and who no longer qualify for company health insurance coverage. These people can invoke their right according to the COBRA initiative.

Sometimes an employee can become temporarily or permanently disabled, in these cases COBRA coverage benefits can continue for an additional 11 month period. This ensures that the person has 29 months of total coverage available through their previous healthcare plan before they must begin looking for new insurance options.

People that elect to take COBRA coverage after leaving an employer must make it a point to make the first premium payment on time, and to always make their payments on time.

It is typical that the first premium payment is paid in full within 45 days following termination of employment. Failure to make this initial payment, or any of the payments that follow, could cause the policy to be terminated.

COBRA insurance is meant to be gateway coverage for employees in the midst of job changes. As an alternative to complete loss of insurance coverage during a probationary time, these folks can maintain their old insurance coverage until their new insurance benefits kick in.

People who are venturing into self-employment can use COBRA as a cushion until they get things lined up so that they don’t have to bother with finding a new insurance provider until the feel that they are ready.

Some companies allow policies to carry over for new employees or allow self-payment. Don’t be in a rush to drop your current healthcare coverage; talk with a representative so that you know what your options will be in the future.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

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