Insider experts pick the best products and services to help you make smart decisions with your money (here’s how). in some cases we receive a commission from our partners, however our opinions are our own. terms apply to offers listed on this page.
- choosing cobra means you can keep your health insurance after quitting or being fired from a job.
- You are responsible for paying your premium and the employer premium, plus a 2% administrative fee.
- Coverage is available for up to 18 months, but may be extended.
- read more personal finance coverage.
More than half of Americans get health insurance through an employer, according to the commonwealth fund. If you get laid off, quit your job, or have your hours reduced, you have a few options for getting health insurance, including getting paid.
Reading: How to buy cobra health insurance
Named for the Consolidated Omnibus Budget Reconciliation Act of 1985, Cobra allows you to continue receiving exactly the same health coverage you’ve been receiving from your employer after you leave the company, as long as you haven’t been fired for misconduct severe and not covered by another plan elsewhere.
But there’s a catch: While you’ll keep coverage at group insurance rates, you’ll have to pay both the employer and employee portions, plus an administrative fee, which can raise the cost of coverage significantly above what you’re expecting. accustomed to paying.
While there are likely cheaper alternatives, such as using the job loss special enrollment period to buy coverage on the health insurance marketplace, cobra is worth considering.
how to get paid health insurance after leaving your job
1. leave a company with 20 or more employees, or reduce your hours
Private sector and state or local government employers with 20 or more employees offer cobra continuation coverage. Many states have laws similar to Cobra that cover businesses with fewer than 20 employees. full-time employees count as one person, while part-time employees count as half.
If you quit your job or had your hours reduced for reasons other than “gross misconduct,” you’re eligible to keep your health coverage for up to 18 months, as long as you continue to pay your premium.
Of course, there is a caveat: the employer’s health plan must be active for current employees. If not, either the business went out of business completely or suspended the health coverage benefit, you will not be able to elect to collect.
2. expect a letter in the mail
Your former employer must notify the insurer in charge of the health plan of a qualifying event (in this case, termination or reduction of hours) within 30 days.
After that, the plan administrator has 14 days to mail you a notice with information about your coverage, where to send your paperwork, and most importantly, how much it will cost. under cobra rules, the total premium cannot exceed 102% of the cost of health coverage for a current employee. that means you could be responsible for up to the amount of your premium, plus your employer’s portion, plus a 2% administrative fee.
If you don’t want to wait for a letter, contact your health plan administrator or company benefits manager for more information.
3. choose health coverage within 60 days
After you receive an election notice, you have 60 days to elect health coverage. If your plan also covered your spouse or dependents while working for the company, they would also be covered by Cobra.
To elect coverage, follow the instructions in the notice.
4. make a payment within 45 days
If you elect collectable coverage, you have 45 days to pay the first month’s premium from the date you mail in your election form. if you pay in full and on time, you will have retroactive coverage. if you don’t make the payment, you could lose your ability to receive full collect coverage.
Coverage can last up to 18 months from the initial qualifying event (the date you were laid off), or longer under special circumstances such as retirement, disability, death or divorce. if your monthly premiums are not paid in full and on time, the employer stops offering a group health plan, you are entitled to medicare, become insured with another plan, or you engage in fraud or other suspicious behavior, your coverage could be terminated .
Editor’s Note: An earlier version of this article incorrectly stated that the total premium you collect cannot exceed 102% of the individual employee’s portion of the premium. the total premium cannot exceed 102% of the total cost of coverage, which means it cannot be more than an employee’s share, plus the employer’s share, plus a 2% administrative fee.