COBRA is temporary because the expectation is that you will obtain new health insurance either on your own or through a new employer. You cannot simply apply for COBRA insurance without having qualifying employer-sponsored health insurance or meeting the other requirements.
The amount of time you can have COBRA insurance depends on your qualifying reason for the coverage. Most periods are either 18 or 36 months. The length of continuation coverage will depend on the qualifying event.
You may have COBRA coverage for up to 18 months if you quit, were fired, or had a reduction of hours. You may have COBRA coverage for up to 36 months if you lose coverage through a spouse or parent because of death, marriage dissolution, or loss of dependent status.
COBRA can terminate benefits early if:
- You do not pay premiums on time or in whole.
- Your employer stops offering health coverage to workers.
- You (or the qualifying beneficiary) obtain a health plan from another group.
- You (or the qualifying beneficiary) become eligible for Medicare.
- You (or the qualifying beneficiary) commit fraud or another act that justifies termination.
COBRA may also extend your coverage period under certain circumstances. For example, if a second qualifying event occurs in the first 18-month coverage period, the beneficiary can apply for continual coverage for another 18 months.
A second qualifying event could include death, divorce or legal separation, loss of dependent status, or eligibility to enroll in Medicare. It resets the clock in the same way as the first event.
If a beneficiary becomes disabled, they can extend benefits for another 11 months. However, the insurance company can increase premium rates up to 150 percent. If you need continual coverage because of a disability, you will need the Social Security Administration (SSI) to determine you qualify.
Some states have additional COBRA laws about eligibility and length of coverage. Depending on where you live, you may have less time to apply for coverage or receive it for a longer period.
Your COBRA premium will be much higher than what you paid while employed. Typically, your employer paid a portion of your premium requirement as part of your benefits package. On average, employers pay 82 percent of single employee coverage and 70 percent for family plans. As a result, your COBRA premium could be four times higher.
If the COBRA premium is too high, there are other alternatives to COBRA health insurance that are more affordable and sometimes free.