Extending Your Health Coverage: How to Get COBRA Health Insurance After Quitting Your Job

September 27, 2023

Getting fired can take you by surprise, but deciding to quit implies having a plan in place. It’s no secret that these options require dealing with health insurance continuation. Without it, severe disease or a bad accident can cost you a pretty penny. And even a minor health issue is likely to result in disproportionate costs.

Life dramatically changed for millions of Americans in just a year from when the pandemic started. In April 2020, more than 6 million citizens sought compensation and coverage extensions. So, you need to understand your options to navigate the unemployment period.

While there are multiple ways to get a continuation and safeguard your well-being, COBRA remains the most popular one. As a federal law, this program can be used by any eligible candidate nationwide. If you are considering COBRA to keep your job-based coverage, here is what you need to know about the program.

How It Works

Most policyholders are aware that COBRA is a costly option. That is why, as a part of the American Rescue Plan Act, the government provides assistance and financial support to unemployed residents dealing with COBRA-related payments. This rescue plan was created to support the American people, including those who faced COVID-induced layoffs.

At this point, dealing with COBRA can seem complicated, but all you need to do is follow the rules and regulations.

The eligibility, however, has its peculiarities. If you are unsure about your decision to quit due to the possible inability to enroll afterward, there is no need to worry. It is possible to qualify for COBRA if you quit or even if you were fired.

On the other hand, the size of your company may determine whether you are eligible for COBRA. Let’s say you worked for a company employing less than 20 people. In this case, you will not be allowed to extend your employer-provided plan.

You can be allowed or denied a continuation depending on the qualifying events and conditions. Let’s unpack it a little more and look into the requirements for approval.

For an employee, the following events can guarantee eligibility:

  • You have to be covered under the job-based group health plan.
  • You must quit, be laid off, be fired, or retire.

Here are the qualification criteria for dependents:

  • If your parent qualifies for the program, you can also qualify.
  • If you are divorced or separated, you may qualify.
  • You can be eligible if you are a husband or the wife of a deceased employee.

But remember that you can lose the opportunity to sign up for COBRA after losing a job if your working hours were significantly reduced or you were fired due to misconduct.

What Does Continuation Coverage Guarantee?

What you get after quitting depends on the elements of your employer-provided coverage. If it did not cover dental or mental health, you should not expect to get these benefits after leaving the company.

At the same time, some companies offer multiple insurance products — bundles — under the group plans. If they cover vision, medicine, and hearing, their employees get to use the same benefits when they get fired, decide to change jobs or retire.

Alternatively, you might have two separate coverages. Let’s say you have your employer-provided group plan and a separate dental plan. If that is the case, you will have to apply for COBRA twice — once for each plan. However, laws, requirements, and timelines might differ from state to state.

If you have doubts or specific inquiries about enrolling in this program, we recommend contacting your company’s HR manager and insurance provider.

Understanding State Insurance Continuation Laws

Most U.S. states have mini-COBRA plans, which typically imply specific timelines and rates.

Here is what the timeline for COBRA coverage looks like in some of the states:

  • If you live in New York or California, you can keep the benefits for up to 36 months.
  • If you are a Connecticut resident, you can keep the plan for up to 30 months.
  • The plans extend only up to 3 months in Georgia, Hawaii, or Tennessee.
  • Oklahoma residents can get an extension for only 63 days.
  • In North Dakota, it can last only 39 days.
  • If you are a disabled resident of Florida, you can get an extra 11 months of coverage.
  • Seniors living in Illinois (ages 55 and older) are allowed to extend the coverage up to the point they can get Medicare. But until then, paying a 20% administrative fee is a must.

Naturally, state laws and regulations vary considerably. With the COVID-19 pandemic, some of the timeframes might have changed. That is why we recommend checking with your State Insurance Department to stay informed about all the recent updates to state laws.

How Much Should I Expect To Pay?

As mentioned before, enrolling in this program does not imply low costs. On the contrary, you will have to bear all the expenses, including a 2% administrative fee. Since your company no longer participates in the process, you should not expect the coverage to be cheap.

It’s no secret that this coverage can be a very pricy option for the newly unemployed. Let’s take a closer look at the comparison of premiums paid by a 48-year-old person with not subsidized and fully-subsidized COBRA, Medicaid, and Benchmark QHP (qualified health plan).

Average monthly self-only premiums (COBRA, Medicaid, Benchmark QHP for 48-year-old)

Source: KFF

The program’s total cost will depend on the initial level of coverage provided by the company. On average, the annual cost of employer-provided coverage in the United States is around $22,000.

But here’s the good news: the U.S. Department of Labor might assist with covering up to 72% of your premium payments through its Health Coverage Tax Credit (HCTC). However, you have to meet the requirements to get it.

The HCTC eligibility implies that a person loses a job due to the negative consequences of international trade. You can visit this website for more details on the tax credit.

Frequently Asked Questions

Can COBRA cover such physical aspects of health as dental and vision?

It might, but only if your company provided it as a part of the group plan. Alternatively, if you had a separate plan, you can apply for its continuation individually.

How long can I expect my employer-provided plan to last after leaving the company?

Generally, it can last up to 36 months. But the timeline depends on the state laws and regulations.

How much time do I have before making the final choice?

As a rule, every eligible applicant has 60 days to pick an option that can satisfy his needs. It means that if you decide to pass on COBRA, you can select any suitable option through the marketplace without the need to sit around waiting for the next open enrollment.

Is COBRA cheaper than other options?

No, it is not cheaper. But it can be the best option if you start your new job in a couple of months. If that is the case, it can be your most cost-efficient option.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at Phonexa.com and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.

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