COBRA extends employer group health insurance coverage for a period of time, usually 18 months, but may be longer under certain circumstances. Federal law in relation to COBRA applies to employers with 20 or more employees. Many states, including Arizona, have “mini-COBRA” laws which apply to employers with 2-19 employees.
It is important to understand that each family member has a right to elect or reject COBRA coverage. The past employee that elects COBRA coverage for his or her family is not required to enroll in COBRA themselves. As an example, a 65-year-old recently retired employee may (and should) enroll in Medicare while their family members may enroll in COBRA.
Per federal law, a worker and their dependents may remain on COBRA for 18 months. If divorce, death of a spouse, or an employee enrolling in Medicare is involved the dependents may remain on COBRA for 36 months. Applicants applying for disability (SSDI) may remain on COBRA for 29 months.
When COBRA first came into existence four decades ago the purpose of the law was to protect past employees from facing possible insurability issues. Prior to 3/23/2010 individual health insurance policies were medically underwritten. A terminated employee (or family member) with a serious pre-existing condition faced the possibility of not being able to purchase coverage. In the past the worker paid the premium for COBRA coverage, the premium rate the same as what the employer was paying, plus a small fee. Today, many employers are choosing to help pay a portion of the COBRA premium for several months as part of a separation package. Also, many terminated employees are enrolling in individual ACA plans with help of a federal premium subsidy.