Who Is Eligible for COBRA Insurance?

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The Consolidated Omnibus Budget Reconciliation Act of 1985 gives a qualified employee or ex-employee the right to remain on an employer-sponsored health plan when certain circumstances or life events would otherwise leave a person ineligible. What’s important to understand is that COBRA is a law that provides for continuation of current health benefits, not a new insurance plan. If you’re eligible and choose to continue on with your current group health plan, all that really changes is that you become responsible for paying 100 percent of the monthly premium, plus a two percent administrative fee.

Basic Eligibility Requirements

To qualify for COBRA, you must work for a company that has 20 or more employees and offers a group health insurance plan. A company that meets these criteria must offer COBRA, and provide notice that continuing health insurance benefits under COBRA is an option. While there is no COBRA-mandated employment history requirement, you must have been covered under the company’s health plan on the day before a qualifying life event occurs.

Qualifying Events

Specific circumstances and life events, commonly referred to as qualifying events, determine whether you’re eligible. The first event is a reduction in your work hours that leaves you below the minimum required to remain on the company’s health insurance plan. The second event is termination of employment for any reason other than gross misconduct. Although COBRA does not specifically define acts that constitute gross misconduct, it does state that the definition does not include common reasons for termination such as poor work performance and excessive absences.

Covered Individuals

Eligibility extends both to you and to qualified beneficiaries. This includes your current spouse, an ex-spouse and your natural or adopted dependent children. Same sex spouses or domestic partners and their children are also considered qualified beneficiaries if they were previously covered under your company’s health insurance plan. In addition, you and qualified family members may be eligible if you’re retired but still receive company health insurance benefits and your employee files for bankruptcy.

Eligibility Time Period

In most cases, COBRA eligibility ends after 18 months. However, the time frame can extend to 36 months in certain circumstances. For example, if you lose health benefits due to a divorce, eligibility extends to 36 months from the date of divorce or legal separation. Also, if you die, qualified beneficiaries can remain insured under COBRA for up to 36 months from the date of your death. Finally, a covered child who no longer meets the eligibility requirements as a dependent may retain eligibility for up to 36 months.