If you lose your health insurance coverage because your work hours are cut or you lose your job, your boss has to keep your coverage for 18 months – but you have to pay for it.

NEWS FLASH!!
Under the federal stimulus bill, there are changes which may help you afford health insurance for you and your family under COBRA. Read the information under "Paying for COBRA insurance" below.

COBRA (the Consolidated Omnibus Budget Reconciliation Act) applies to private-sector employers with 20 employees and to state and local governments. If you didn't have health care insurance through your employer, you don't have rights to COBRA coverage when you leave a job.

If you work for a company with less than 20 employees, check your state's law to see if you have protections there.

Oddly, workers have more rights to health insurance coverage after they lose their jobs than while they have a job. We still don’t have a right to the most important thing – accessible, affordable health care. Here are the general rights after you leave a job:

  • All workers who had coverage under the employers’ group plan have the right to extend their health insurance for at least 18 months – if they can afford to pay for it.
  • Husbands, wives, and children who are losing coverage they had through an employee’s health plan have the right to extend their health insurance separately.
  • Workers who were not enrolled in a group insurance plan (even if they were eligible), do not have a right to coverage under COBRA.
  • A worker who becomes disabled can get COBRA coverage for a total of 29 months (to allow for Medicare coverage to start).
  • Workers and their dependents who have pre-existing conditions can’t be denied coverage.
  • COBRA coverage begins on the day that the other coverage ends.
  • You can lose COBRA coverage if you don't tell the COBRA administrator (usually within 60 days) of certain events which affect coverage. Make sure you understand and follow these rules.
  • COBRA only gives minimum protections -- employers don’t have to make the worker pay the full cost of the health insurance under COBRA. Bosses can also let workers keep the health insurance longer than 18 months.
  • You have to choose COBRA coverage within 60 days of when the plan sends you the "election notice" or within 60 days of when your insurance ended, whichever is later. If you don't, you lose your right to COBRA coverage.
  • If you lose a job because of "gross misconduct," your employer may not have to offer COBRA coverage.
  • COBRA does not cover life insurance.

There's another law to help keep your insurance if you take time off because of a serious illness (for you or a family member). The Family Medical Leave Act (FMLA) says workers (at companies with 50 employees) who take a leave up to 12 weeks keep their group health insurance and pay the same share of the premium as when they were working. If you don't go back to work after the leave, your employer can demand that you re-pay the company-paid premiums. If you don't go back because of things that you couldn't control (like you are too sick or you have to take care of your family member), you don't have to repay the company-paid premiums.

What workers have COBRA protections:

  • Workers at private employers with at least 20 employees. Part-time workers are counted based on how many hours they work (2 workers who each work 20 hours/week equal 1 full-time worker).
  • State and local government workers. State and local governments that are self-insured can decide to take certain rights and protections away from employees. If they do, they have to tell the workers and the Federal government every year.
  • Federal employees are covered by Federal Employees Health Benefits Amendments Act of 1988. The law lets Federal workers extend health benefits. It is similar to COBRA, but with some important differences. One major difference is that husbands and wives can’t continue their health benefits if the employee who has the coverage dies. If the spouse divorces the Federal employee then they can keep coverage. (Remember: if you're married to a Federal employee, divorce them, don't kill them.)
  • Independent contractors who are covered by a company’s health insurance are covered by COBRA.
  • Union workers who have a union contract that gives them a medical plan may have a right to continued coverage. Check your contract and talk to a union leader or representative.
  • If you don't have COBRA rights, most states have laws protecting workers at small businesses (less than 20 employees) who are not covered by COBRA.

Paying for COBRA insurance

Normally under COBRA, the company just has to let you buy the continued coverage and they can charge up to 102% of the premium (the extra 2% is for administrative costs). With the stimulus bill, there is a subsidy for 65% of your COBRA premium payments for 9 months if you were laid off between 9/1/2008 - 12/31/2009. If you were laid off after 9/1/2008 and you didn't sign up for COBRA or let it lapse, you have another chance now that there's a subsidy to make it less expensive. Workers whose income for the year they would get the subsidy is more than $125,000 (more than $250,000 for families) are not eligible.

Realistically, many workers cannot afford the costs for insurance. The first bill you get may be more than you expect because it covers time from when you left until you get the bill, even if you didn’t sign up for coverage until a month had passed. There are two ways to make the costs lower:

  1. Your former employer can (but doesn’t have to) let you drop additional benefits (like vision, dental, prescription) within the plan.
  2. If you were covered by different health plans (one for medical, a different one for prescriptions, another for vision care), you get to decide on which ones you keep.
  • You are responsible for paying your COBRA premiums, even if you don't get the bill. Pay close attention to the date when the bill is due. The bill is counted as paid on the date is was mailed. You must get at least a 30-day grace period after the due date on payments.
  • The cost of your premium can go up if the costs of the health plan go up for everyone at the workplace. Generally they have to be set for the year.
  • You have to be allowed to pay the premiums every month. Some plans will let you make payments on another schedule, like every week or quarter (3 months).
  • Even if you don't get your first COBRA bill for several months and didn't have any medical bills, you have to pay from the time you left the job. Otherwise, your coverage won't be continuous and you don't have COBRA rights.

COBRA is administered by different agencies:

US Department of Labor (Employee Benefits Security Administration, Division of Technical Assistance and Inquiries) administers COBRA requirements for disclosure and notification (telling you about your right to COBRA coverage and giving you the right information about the plan, your coverage, and the rules).

The Internal Revenue Service administers COBRA rules about eligibility, coverage, and premiums.

The Department of Health and Human Services administers the law for public sector workers. Their Centers for Medicare and Medicaid Services has information about COBRA protections for public workers.

How COBRA is Enforced
Protecting your rights under COBRA (and even getting good information) can be very confusing and difficult. Workers whose rights are violated have to file a lawsuit. If your former boss is breaking the COBRA law, it may help to have a lawyer, or your congressman, write them a letter. State laws can be important because they may give you other rights and because they may be easier to enforce.