COBRA Continuation Coverage

Understanding COBRA Health Insurance Continuation

Losing your job or experiencing other qualifying life events can be stressful enough without worrying about losing your health insurance coverage. That's where COBRA comes in. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that gives you and your family the right to continue your BetterHealth health insurance coverage for a limited time after certain qualifying events. This guide explains everything you need to know about COBRA continuation coverage.

What is COBRA?

COBRA is a federal law passed in 1985 that requires most employers with group health plans to offer employees and their families the option to continue their health insurance coverage when they would otherwise lose it due to certain life events. Essentially, COBRA acts as a bridge, allowing you to maintain the same health coverage you had while employed, giving you time to find alternative insurance or employment.

The key benefit of COBRA is continuity of care. You keep your same doctors, prescription coverage, and benefits—nothing about your actual insurance coverage changes except who pays the premium. This can be especially important if you're in the middle of medical treatment, have ongoing prescriptions, or have doctors you don't want to leave.

Who Qualifies for COBRA?

COBRA coverage is available to you and your covered dependents when you experience what's called a "qualifying event." These events fall into two categories: events affecting the employee and events affecting dependents.

Qualifying Events for Employees

Voluntary or Involuntary Termination: Whether you resign, are laid off, or are terminated for reasons other than gross misconduct, you're eligible for COBRA. It doesn't matter if you left voluntarily or were let go—if you're no longer employed and no longer eligible for the group plan, COBRA applies.

Reduction in Hours: If your hours are reduced to the point where you no longer qualify for health benefits (typically dropping below full-time status), you're eligible for COBRA even though you're still employed.

Qualifying Events for Dependents

Divorce or Legal Separation: If you divorce or legally separate from your spouse, your former spouse loses eligibility for your employer's health plan and becomes eligible for COBRA.

Death of Employee: If you pass away, your covered dependents can elect COBRA coverage to maintain their health insurance.

Child Aging Out: When your dependent child reaches the age limit for coverage under your plan (typically 26), they can elect their own COBRA coverage.

Medicare Eligibility: When you become eligible for Medicare, your dependents who lose coverage can elect COBRA.

How Long Does COBRA Coverage Last?

The duration of COBRA coverage depends on the qualifying event:

Employee Termination or Reduction in Hours: You and your covered dependents can continue coverage for up to 18 months from the date of the qualifying event. This is the most common COBRA scenario.

Qualifying Dependents (divorce, death, etc.): Your eligible dependents can continue coverage for up to 36 months. This longer period recognizes that dependents may face more difficulty obtaining alternative coverage.

Disability Extension: If you or a covered family member is determined to be disabled by Social Security within the first 60 days of COBRA coverage, you may be eligible to extend coverage to 29 months instead of the standard 18 months. However, the premium may increase for the additional 11 months.

Second Qualifying Event: If a second qualifying event occurs during your initial COBRA period (for example, if you were on COBRA due to job loss and then divorce during that time), your dependents may be eligible to extend coverage up to a total of 36 months from the original qualifying event.

The COBRA Election Process

Understanding the timeline and process for electing COBRA is crucial because missing deadlines means losing your right to coverage.

Step 1: Notification (Within 14 Days)

Within 14 days of your qualifying event, BetterHealth's benefits administrator will mail you a COBRA election notice packet. This packet includes:

• Detailed explanation of COBRA rights
• Coverage options available to you
• Premium costs for each coverage option
• Election form
• Instructions for payment

Make sure your address is up to date with HR before you leave BetterHealth. If the notice is sent to an old address and you don't receive it, you could miss the election window.

Step 2: Review Your Options (Within 60 Days)

You have 60 days from the later of: (1) the date you lose coverage, or (2) the date you receive the COBRA election notice to decide whether to elect COBRA coverage. This is your election period.

During this time, carefully review:

• What coverage options are available (you can choose to continue medical, dental, vision, or any combination)
• The monthly premium costs
• How long you'll be eligible for COBRA
• Alternative insurance options (marketplace plans, spouse's insurance, etc.)

Important: Even if you're not sure you want COBRA, it's worth noting that during these 60 days, you have retroactive coverage. If you have a medical emergency during the election period, you can elect COBRA afterward and it will cover those expenses. However, you'll owe all premiums retroactive to your coverage loss date.

Step 3: Complete and Return Election Form

If you decide to elect COBRA, complete the election form included in your packet and return it to the benefits administrator listed in the notice. You can typically submit it by mail, fax, or online. Make sure you:

• Indicate which coverage you're electing (medical, dental, vision)
• List all covered family members
• Sign and date the form
• Keep a copy for your records

Step 4: Pay Your First Premium (Within 45 Days of Election)

Once you elect COBRA, you have 45 days to make your first premium payment. This payment must include all premiums from your coverage loss date through the current month. For example, if you lost coverage on January 15th but didn't elect COBRA until February 20th, your first payment would cover January 15-February 20th plus the remainder of February.

Understanding COBRA Costs

The biggest shock for most people electing COBRA is the cost. While you were employed, BetterHealth paid the majority of your health insurance premiums—typically 70-80% of the total cost. Under COBRA, you're responsible for the entire premium amount.

How Premiums Are Calculated

Your COBRA premium includes:

• Employee portion: What you paid while employed
• Employer portion: What BetterHealth paid on your behalf
• Administrative fee: Up to 2% of the total premium to cover administrative costs

Example: If your portion of the premium was $125/month and BetterHealth was paying $375/month, the total premium was $500/month. Under COBRA, you'd pay $510/month ($500 + 2% admin fee). That's more than 4 times what you were paying as an employee.

Is COBRA Worth the Cost?

COBRA is often expensive, but it may be worth it in certain situations:

• You're in the middle of medical treatment and don't want to change doctors
• You've already met your deductible for the year
• You take expensive prescription medications that your plan covers well
• You expect to find new employment with benefits within a few months
• You have a medical condition that makes it hard to qualify for individual insurance (though the Affordable Care Act has reduced this concern)
• You're between jobs and need short-term coverage

However, COBRA might not be your best option if you'll be unemployed for an extended period or if marketplace plans offer better value.

Making COBRA Payments

After your initial payment, COBRA premiums are due monthly, typically on the first of each month. You'll have a 30-day grace period to make each payment. If payment isn't received by the end of the grace period, your coverage will be terminated, and you generally cannot re-elect COBRA.

Payment Methods: Most COBRA administrators accept payment by check, automatic bank draft, or online payment through their portal. Set up automatic payments if possible to avoid accidentally missing a deadline.

Keep Records: Save all payment confirmations and correspondence related to your COBRA coverage. If there's ever a dispute about whether a payment was made on time, you'll need proof.

When COBRA Coverage Ends

Your COBRA coverage will terminate when:

• Maximum coverage period is reached: 18, 29, or 36 months, depending on your qualifying event
• Premiums aren't paid on time: If you miss a payment deadline, coverage ends immediately
• You obtain other group health coverage: If you get a job with health benefits or are covered under a spouse's plan
• You become enrolled in Medicare: COBRA coverage ends the month you're covered by Medicare
• BetterHealth terminates its group health plan: If BetterHealth stops offering health insurance to all employees, COBRA rights end

When your COBRA coverage ends, you'll have a special enrollment period to sign up for marketplace insurance. Losing COBRA is considered a qualifying life event for marketplace coverage.

Alternatives to COBRA

Before committing to expensive COBRA coverage, explore these alternatives:

Health Insurance Marketplace (Healthcare.gov)

Losing employer-sponsored coverage is a qualifying life event that gives you a 60-day special enrollment period to purchase marketplace insurance. Depending on your income, you may qualify for premium subsidies that make marketplace plans significantly cheaper than COBRA. Visit Healthcare.gov to compare plans and see if you qualify for financial assistance.

Spouse or Partner's Insurance

If your spouse or domestic partner has employer-sponsored insurance, losing your coverage is typically a qualifying event that allows you to enroll in their plan outside of their employer's open enrollment period. Contact their HR department immediately to understand the timeline—they usually require enrollment within 30 days of your loss of coverage.

Short-Term Health Insurance

Short-term health insurance plans can provide temporary coverage for gaps between jobs. These plans are typically less expensive than COBRA but also offer more limited coverage and aren't required to comply with Affordable Care Act protections. They're best used as a stopgap if you expect to have new coverage soon.

Medicaid

If your income drops due to job loss, you may qualify for Medicaid coverage in your state. Unlike marketplace insurance, Medicaid doesn't have specific enrollment periods—you can apply anytime. Check your state's Medicaid program for income eligibility requirements.

Frequently Asked Questions

Can I choose to continue only some of my coverage (like medical but not dental)?
Yes. You can elect to continue any or all of the coverage you had as an employee. You don't have to continue everything.

What if I want to change my coverage level under COBRA (from family to individual)?
Generally, you must continue the same coverage you had before the qualifying event. However, during your employer's annual open enrollment period, you may be able to make the same changes available to active employees.

Can I drop COBRA coverage if I find something better?
Yes, you can terminate COBRA coverage at any time. However, once you terminate, you cannot re-elect it.

What happens to my FSA or HSA under COBRA?
Health FSAs can be continued under COBRA if you have a remaining balance. HSAs are not subject to COBRA, but if you have an HSA, you own it and it stays with you regardless of employment.

I'm pregnant—will COBRA cover my maternity care?
Yes. COBRA continuation means continuing the exact same coverage you had. If your plan covered maternity care before, it continues to cover it under COBRA.

Important Tips

• Update your address: Make sure your mailing address is current with BetterHealth HR before your departure to ensure you receive COBRA notices
• Don't miss deadlines: COBRA has strict deadlines that cannot be extended. Mark all dates on your calendar
• Compare all options: COBRA isn't always the best choice financially. Take time to compare with marketplace plans
• Maintain payment records: Keep copies of all payments and correspondence
• Ask questions early: If you're unsure about anything, contact the benefits administrator immediately

Need Help with COBRA?

If you have questions about your COBRA rights, election process, or coverage details, our Benefits team is here to help.

Contact Benefits:
Email: [e-mail]
Phone: [phone] ext. 2300
UKG: Submit a case under "Benefits & Insurance"

Losing your job doesn't have to mean losing your health coverage. COBRA gives you options and time to find the right solution for your situation.