COBRA & CalCOBRA Insurance

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The Consolidated Omnibus Budget Reconciliation Act — better known as COBRA — gives you the legal right to continue group health benefits when they might otherwise end due to job loss, divorce or death. Your COBRA benefits are the same as those you had in the employer plan.

COBRA applies only to companies with at least 20 employees. Employers are required to notify you when you are eligible for these benefits. If you elect to receive COBRA benefits, you will pay 100% of the total premium for your benefits plus a 2% administrative fee.

CalCOBRA provides the same protection as COBRA in California for small employers with 2 to 19 workers. If you take advantage of CalCOBRA, you must pay the entire premium that both you and your employer have paid in the past, plus an administrative fee. Your premium may be based on the age range of each employee or on a percentage of the total number of the employees covered by the plan.

If the employer changes the group health benefits, your COBRA or CalCOBRA benefits will change, too. If the employer stops offering group health benefits, your COBRA or CalCOBRA coverage will end. If you lose your COBRA or CalCOBRA benefits or you can no longer afford to keep them, contact your local Health Insurance Counseling & Advocacy Program (HICAP) office for help with other coverage.

Note: If you have used all of your COBRA or CalCOBRA benefits and you are not yet age 65 or eligible for Medicare, and you meet the definition of an eligible individual under Health Insurance Portability and Accountability Act (HIPAA) rules, companies are required to sell you an individual health insurance policy, regardless of your health. For more information, see Individual Health Insurance.

Topics on this page:

  1. Qualifying Events for COBRA or CalCOBRA
  2. Medicare & COBRA
  3. COBRA Premiums

1. Qualifying Events for COBRA or CalCOBRA

Certain events, such as layoffs, death and divorce, trigger eligibility for COBRA or CalCOBRA. The plan administrator must notify the employee and his/her covered spouse of their right to continue coverage within 44 days of the event, except during a legal separation or divorce. In those cases, the employee must first notify the plan administrator of the separation or divorce; the administrator then has 14 days to notify both parties of their COBRA rights. The employee has 60 days from the date he/she receives the COBRA notice to notify the administrator if he/she wants COBRA benefits.

Note: Special rules apply when a person becomes disabled or has more than one qualifying event. For more information, contact the U.S. Department of Labor.

The chart below shows events that may trigger COBRA and CalCOBRA benefits, as well as the maximum period of time you will be covered.

Qualifying Event for COBRA or CalCOBRA

Person Covered

Maximum Length of Coverage

Employment ends or hours are reduced

Employee, spouse and dependent child/children

18 months1

  • Employee becomes eligible for Medicare
  • Divorce or legal separation
  • Death of covered employee

Spouse and dependent child/children

36 months

Loss of dependent child status

Dependent child

36 months

Bankruptcy of former employer

Retired employee, spouse and dependent child/children

  • 36 months (if the bankrupt company continues to have a health plan; includes the additional 18-month extension under CA law1)
  • 0 months (if the bankrupt company has no health plan)
  • Union members may be eligible for COBRA through a collective bargaining agreement.
  • In rare cases, a bankruptcy court may order continuation of COBRA coverage.

1 California law requires most companies to extend COBRA benefits for a total of 36 months when a person is entitled to fewer than 36 months of federal COBRA coverage. Some companies are exempt from this requirement. Contact the California Department of Insurance or call 1-800-927-4357 to find out if your employer is required to comply with this extension.

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2. Medicare & COBRA

If you have Medicare before becoming eligible for COBRA, you can:

  • Receive primary coverage from Medicare and secondary benefits from COBRA. However, you are not eligible for CalCOBRA if you already have Medicare, and you cannot stay on CalCOBRA if you become eligible for Medicare.
  • Choose between COBRA and a Guaranteed-Issue Medigap policy. COBRA benefits are generally more generous than Medigap benefits. As a result, some Medicare beneficiaries who have high medical expenses choose COBRA coverage. However, the premiums for COBRA are very high and Medicare with a Medigap policy is often a less-expensive combination. For more information, see Your Rights to Buy a Medigap Policy.

If you choose both Medicare and COBRA coverage, be sure your health care providers know they must bill Medicare first. Also, sign up for Medicare Part B and tell the COBRA carrier when you become eligible for Medicare. If you fail to do this and COBRA pays primary benefits when Medicare should have, you may become liable for those costs.

People with end-stage renal disease (ESRD) who have Medicare and employer health coverage have an exception to this order of payment. COBRA is required to pay first (as the primary insurer) during the 30-month coordination of benefits (COB) period, and Medicare pays second. After this period, Medicare pays first.

Note: If you are already on COBRA when you become eligible for Medicare, you will generally lose your COBRA benefits when Medicare benefits begin. However, your spouse may be entitled to additional months of COBRA coverage because of your eligibility for Medicare.

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3. COBRA Premiums

If you have health coverage through COBRA or CalCOBRA, you must pay the premiums yourself. For COBRA, you will pay 102% of the premium the employer pays. For CalCOBRA, you will pay:

  • At least 110% of the premium the employer pays if it is based on the age of covered employees.
  • A maximum of 213% of the group rate the employer pays if it is not based on age (this is the total premium the employer pays divided by the number of employees).

Your premium will change each time the employer's premium changes, regardless of the method used to calculate it.

Note: If you do not already have Medicare Part B and are eligible for COBRA because your employer coverage ends, you have an 8-month period from the date your coverage ends to enroll in Part B. If you do not enroll during this 8-month Special Enrollment Period, you may be required to pay a penalty when you enroll in Part B later, and the effective date of your benefits will be delayed. See Coverage While You and/or Your Spouse Works.

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Updated Nov. 22, 2010

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