If you currently have COBRA coverage or you are in a position to elect COBRA coverage, the following information should be useful to you.
Losing your job because of a permanent disability does not necessarily mean you lose coverage under your former employer’s group health plan. You may have the right to elect COBRA healthcare continuation coverage under the plan. Federal law requires employers with 20 or more employees to provide COBRA. To be eligible, you must also have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees.
Under COBRA, you have the option to keep your employer’s group health plan coverage for a limited period of time after your employment ends. If you are eligible for COBRA, you should get a detailed notice with coverage and application details from your former employer’s benefits administrator or the group health plan.
COBRA generally allows you and your dependents to keep the group health plan coverage for 18 months after your employment ends. There is an additional 11 month extension available when a qualified beneficiary is determined by the Social Security Administration (SSA) to be disabled.
Extra coverage for those with disabilities. If one of the qualified beneficiaries in a family is disabled and meets eligibility requirements, all of the qualified beneficiaries in that family are entitled to an 11-month extension of the general 18 month COBRA coverage period. This would then provide a total COBRA coverage period of 29 months.
This 11 month extension is available if:
- a qualified beneficiary is determined by the SSA to be disabled at some point before the 60th day of COBRA coverage, and
- the qualified beneficiary (or another person on his or her behalf) notifies the health plan administrator of the SSA determination.
Making the choice. Trying to decide whether COBRA coverage is best for you is not easy. Like most things, the choice comes down to weighing the costs versus the benefits of having the coverage.
COBRA coverage costs can be surprisingly high, since part of your health insurance costs may have been paid by your employer while still employed. For the first 18 months, the premium for continuing health insurance coverage costs up to 102 percent of the cost to the plan for those still employed. This includes both the portion paid by you and any portion paid by the employer as an employee benefit, plus a two percent administrative fee.
For those receiving the 11 month disability extension, the premium for these additional months may go up to 150 percent of the plan's total cost of coverage. Though group health coverage for COBRA participants is usually more expensive than health coverage for active employees, it is still usually less expensive than getting individual health coverage from a non-employer source.
On the bright side, COBRA coverage allows you to continue your previous health insurance and cover your increasing medical needs. Also, by continuing coverage you won’t have to fear having something not covered because of a pre-existing condition.
Unfortunately, there is no one-size-fits-all answer to whether getting COBRA coverage or if keeping it is best for you. At some point, you must do some number crunching to see if your expected medical costs (factoring in deductibles, co-pays, and out-of-pocket expenses) are greater than your COBRA premium payments.
If your insurance costs outweigh the medical benefits received, or if you just don’t have the money to pay for premiums, consider exploring some low-cost healthcare options like drug company and state pharmaceutical assistance programs. There are also various government programs (such as Medicaid, Veteran’s Assistance benefits, and state and local health services) that provide health insurance coverage to people who can’t afford to buy it themselves.
To learn more about other potential healthcare coverage options, read our section on Medicare.
You may also want to review whether the American Recovery and Reinvestment Act of 2009 impacts your COBRA coverage.