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What is COBRA?

COBRA is 1985 federal legislation that requires employers with more than 20 employees to allow employees that leave the company to continue their insurance in the company plan for 18 to 36 months. The employee is required to reimburse the employer for the cost of the insurance plus up to a 2 percent administrative fee.

COBRA and the American Recovery and Reinvestment Act:

President Obama signed an amendment to the COBRA ARRA provisions. This amendment has increased the eligibility period for the COBRA subsidy from December 31, 2009 to February 28, 2010. The maximum period for receiving the COBRA subsidy is now 15 months.

To read more about details and updates visit our COBRA subsidy page.

Frequently Asked Questions Regarding the COBRA Subsidy Extension:

Q. What plans are subject to COBRA?
A. Almost every group health plan maintained by employers for their employees are part of COBRA's provisions. These plans include group health plans corporations, partnerships, tax exempt organizations, state and local government, as well as health care spending accounts.

Q. What does COBRA do?
A. COBRA provides former employees, retirees, spouses, and dependent children the right to temporary continuation of health coverage at group rates. Coverage, however, is only available to those who lost coverage due to certain events. Prices on premiums often depend on each individual situation.

Q. How do you become eligible for COBRA continuation coverage?
A. In order to become eligible (1) you must have enrolled in an employer's health plan when you worked and (2) the health plan you were terminated from has to remain in effect for active employees.

Q. Do I have to re-enroll in COBRA because the subsidy has been extended?
A. If you're uninsured and COBRA is your only option you should re-enroll. If your coverage expires, you have 30 days to reenroll. The subsidy only lasts 15 months and COBRA only lasts 18 months.

Q. If I haven't been contacted by my benefits administrator, did I receive my extension and remain eligible for COBRA?
A. Yes, you should be contacted. The Department of Labor is still working out specific requirements for employers. The details are being process and you should know if you qualified for COBRA by February 28, 2010. You will likely be contacted by mail but it's a good idea to contact your benefits administrator and let them you you're interested in reenrolling in subsidized COBRA.

Q. If I cancelled my COBRA coverage after my subsidy ran out, can I reenroll now that it has been renewed?
A. Yes. If you reached the end of your subsidy period prior to legislation extending it to 15 months, you'll have an extended period. 

Special Note: Even though your employer is paying a group rate and allowing you to pay this same group rate after you have left the company, COBRA can still be an expensive option. You may be able to save substantial money by exploring individual and family health insurance options, but before you do …read on below…

Follow the wisest course of action!

It may be wisest to continue your COBRA benefits if:

  • you have very comprehensive benefits and don't mind the extra cost.
  • you have had health problems recently.
  • you have had chronic or continual health problems.
  • you are required to take expensive medications.
  • you have been declined for insurance recently.

It may be wisest to consider a COBRA Alternative if:

  • you want continual coverage but at a lower cost and
  • you have not had any significant chronic health problems and
  • you have not received any recommendations from physicians or healthcare workers to undergo a medical procedure in the future.

Individual and family insurance products are often much less expensive than COBRA insurance because they reward people for good health and healthy lifestyles.