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I lost my COBRA coverage. Now what?

I lost my COBRA coverage. Now what?

A man was walking down the street and groaned “I lost my COBRA…” Everyone nearby jumped in fear (expecting a massive snake was lurking nearby). One curious fellow decided to take pity on the man and help him find his cobra.

He approached and asked, “Where did you last have your cobra?”

The first man tried to explain, “You see my former employer hired these guys and they sent me this threatening letter. It said if I didn’t pay by last Friday, I would lose my COBRA.”

The second man was startled. A little afraid, he asked, “What kind of work did you do?”

The first man simply stated “I worked for a major distributor.”

Fear grew in the second man. “You gotta get out of this. Don’t worry about the snake and move on with your life.”

The first man chuckled, “I don’t have a snake, I have COBRA. I left my employer three months ago and was using COBRA to continue my benefits through them.”

That is where the real conversation begins.

What is COBRA?

COBRA, short for Consolidated Omnibus Budget Reconciliation Act, is a program that allows eligible individuals and their dependents to continue group health benefits when they would otherwise lose coverage. COBRA coverage can be offered for a variety of reasons but is most common due to job loss or a reduction of work hours.

How do you enroll in COBRA?

When you have a qualifying event (such as job loss), you will receive a notice from your employer (or another third-party on behalf of your employer). This notice is called a “COBRA Specific Rights  Notice”. The notice will outline the benefits you are eligible to enroll in, your premium calculations and important COBRA deadlines.You will have up to 60 days to elect coverage and pay the initial premiums.

How did I lose COBRA coverage?

There are a number of reasons COBRA coverage ends early, but only a few reasons you can unexpectedly lose COBRA.

Unable to pay premiums

COBRA coverage can come with some hefty premiums. When you are covered by your employer, they are likely paying a large portion of your premiums. On COBRA, you are responsible for paying the full cost. The cost of covering the full premium can be too much to absorb and individuals simply stop paying premiums and lose coverage.

Become eligible for Medicare

The other likely scenario in which individual lose COBRA coverage is that you become eligible for Medicare. When you become eligible for Medicare, you will typically stop (or become ineligible for) COBRA coverage. (Read our blog Understanding how Medicare and COBRA interact for more insight into this process).

What to do if you lose COBRA 

If you lost COBRA because you couldn’t afford the premiums, your next best option for coverage is private insurance.

What about coverage through the Exchange?

In order to sign up for coverage through the Exchange, you need to be in a period of special enrollment following a qualifying event. Since losing COBRA coverage early is not a qualifying event, you would not be eligible to sign up for coverage through the Exchange. (If your COBRA runs out after the normal period, which is typically 18 or 36 months, you should be eligible for a Special Enrollment and could sign up for coverage through the Exchange).

Coverage through private insurance

To continue coverage, you can enroll in private insurance. There are various options for private insurance, depending on what you can accommodate price-wise and what kind of services you expect to need. If you lost COBRA coverage early and aren’t eligible for Marketplace coverage, learn about your alternate options here.