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COBRA Made Simple: Frequently Asked Questions

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is a federal law designed to help individuals maintain healthcare coverage during significant life changes. We know this topic can get a little fuzzy, so we're here to answer some of the most common questions about COBRA.

What qualifies as a significant life change?

These changes are referred to as "qualifying events." They include

  • Involuntary employment termination
  • Reduction in work hours
  • Divorce/legal separation
  • Medicare eligibility
  • Death of the covered employee
Who is eligible for continued health coverage under COBRA?

If an employee is covered by your employer's group health plan at the time of the qualifying event, the employee and their covered dependents are eligible for COBRA continuation coverage.

Is COBRA participation mandatory?

No, participation is optional. Covered employees, spouses, and dependents are free to explore other coverage options.

Who pays the COBRA premiums?

COBRA premiums are paid by the covered employee and/or their dependents. Employers do not contribute.

Can HSA account funds be used to pay for COBRA continuation coverage?

Yes. Individuals can also continue putting money in their HSA account while on COBRA if the plan meets the high deductible health plan (HDHP) requirement. Keep in mind, though, that if the individual is no longer employed, they will have to make the contributions post-tax rather than through payroll deduction and take a tax deduction on their tax return instead.

How long do I have to decide on COBRA continuation?

You have a 60-day window to elect or decline COBRA continuation coverage after a qualifying event.

If I decline COBRA, can I change my mind and elect it later?

Yes, but only during the selected election window, and coverage begins at the point of election.

Are children born or adopted during COBRA coverage considered qualified beneficiaries?

Yes, any child born or placed for adoption during the continuation coverage period is automatically considered a qualified beneficiary.

How long does COBRA continuation coverage last?

Generally, coverage can last up to 18 months, with an 18-month extension in specific situations.

Can COBRA coverage be canceled before the maximum coverage period?

Yes, coverage can be canceled for reasons such as non-payment of premiums, enrollment in another plan, or entitlement to Medicare benefits.

What if the whole company permanently closes?

If the company ceases to exist with no available health plan, COBRA eligibility is not applicable.

Medcom recently earned a top vendor spot on Shortlister for our COBRA Administration services, so let us help make COBRA a breeze. Feel free to contact us or take a peek at our lineup of COBRA and Premium Billing solutions.

We're always here to help! If you have any questions or want to see how a COBRA administrator can benefit your company, feel free to contact us. Medcom was just named as a top vendor on Shortlister for our COBRA Administration services. In the meantime, check out all of our COBRA solutions.

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