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Posted April 10, 2019

Everything You Need to Know About COBRA Health Insurance


Most people don’t need to know about COBRA continuation health coverage until they’ve lost employer-based health insurance coverage—an often-unexpected occurrence. At that point, they need to know what it is, what it covers and for how long. Not to worry. We’ve got you covered with straightforward answers to all of your COBRA questions.


What is COBRA health insurance?

When you lose employer-based insurance because you’ve lost or quit your job, aged out of your parents’ health insurance or gotten a divorce, you may be eligible for COBRA continuation coverage, which allows covered employees, their spouses, former spouses and dependent children to temporarily keep the same health plan, benefits and services you had before. Your employer should send you and your family a notice that you are eligible for COBRA, outlining your COBRA rights and how much it will cost.

In 1985, COBRA amended the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to require group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated. The law applies to all group health plans offered by private-sector employers with 20 or more employees as well as by state or local governments. The U.S. Department of Labor oversees COBRA compliance. The Departments of Labor and Treasury have jurisdiction over private-sector group health plans, while the Department of Health and Human Services administers the continuation coverage law as it applies to state and local governmental health plans.


What does COBRA stand for?

Consolidated Omnibus Budget Reconciliation Act. Yep, there’s a reason we just call it COBRA.


How long do I have to decide if I want COBRA coverage?

You will have an election period of at least 60 days to decide whether to continue your health plan with COBRA or to seek coverage through the Health Insurance Marketplace, through a spouse’s employer or Medicaid.


What counts as a qualifying event for COBRA? 

According to the U.S. Department of Labor, the following are qualifying events for covered employees:

  • Termination of the employee’s employment for any reason other than gross misconduct
  • Reduction in the number of hours of employment


The following are qualifying events for the spouse and dependent child of a covered employee:

  • Termination of the covered employee’s employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee
  • Covered employee becomes entitled to Medicare
  • Divorce or legal separation of the spouse from the covered employee
  • Death of the covered employee
  • Loss of dependent child status under the plan rules (plans that offer coverage to children on their parents’ plan must make the coverage available until the adult child reaches the age of 26)


How much does COBRA health insurance cost?

It costs the same as your previous monthly health plan, plus a 2 percent service charge.

However, because you will now be responsible for the premiums that were once subsidized by your employer, your parents’ employer or your spouse’s employer, the monthly cost shouldered by the consumer are much larger. On average, employers pay nearly 82 percent of the cost of their employees’ health insurance, and nearly 70 percent of the total family premium, so this means COBRA insurance can be up to 82 percent costlier for a consumer than their previous monthly payment.


How long does COBRA coverage last? 

By law, COBRA continuation coverage can extend from between 18 to 36 months, depending on the type of qualifying event. Certain plans may provide longer periods of coverage.


How does WEX Health make COBRA benefits easier to access and use?

The WEX Health COBRA & Direct Billing program is the health benefit industry’s leading enterprise-class central system of record for COBRA, member billing and state continuation administration.

In June 2018, we introduced new features and functionality to our WEX Health Cloud platform; this included rolling out the WEX Health Cloud COBRA & Direct Billing Mobile App, which provides consumers ease of use and quick accessibility to several convenient WEX Health COBRA & Direct Billing features, including: online registration and election, credit/debit card payments, recurring ACH and one-time checking/savings payments. The app, which uses PIN security, enables consumers to view communications as well as payment history.


WEX Health

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