How Long Does COBRA Health Insurance Last?

In 1986, the Consolidated Omnibus Budget Reconciliation Act (COBRA) was passed.This act allows workers to continue health insurance coverage if they lose their job under certain circumstances. Group health insurance benefits can also be provided to retirees, spouses and dependent children. Coverage is provided for a maximum of 18 months. However, in some situations, such as the development of a disability or during times of recession, coverage may be extended. However, it is not to exceed 36 months.

COBRA applies to employers with at least 20 employees covered under their group health plan. Employers with less than 20 employees are considered small businesses and therefore, exempt. Federal employees are exempt as well. For an employee to be eligible for coverage under COBRA, that employee must be terminated, experience a significant decrease in hours or resign from a position. In instances of gross misconduct, such as theft or threatening behavior at work, COBRA can be denied. Spouses of covered employees are also covered in the event of divorce or death.

After a plan administrator is notified of a change in employment status, they have 14 days to send the eligible employee an election notice. The employee has 60 days from receipt of this notice to decide whether or not to accept this continuation of coverage. If the employee chooses to continue coverage under COBRA, the premium must be paid within 45 days.

The premium for COBRA is calculated by adding the amount previously taken out of the employee's paycheck for health coverage with the amount the employer was contributing to the employee's health coverage. Administrative fees can also be added but are not to exceed two percent of this total. The premium can be costly but is generally less than that of an individual plan with the same benefits.

COBRA coverage begins on the day of the change in employment status and does not allow for breaks in coverage. Therefore, premiums must be paid on time to ensure continuation of coverage. Although a grace period of at least 30 days is permitted, if a premium is paid beyond the grace period, coverage can be terminated. Monthly billing statements are not required to be sent requesting payment.