COBRA Myths Debunked
Published on April 25th, 2023
COBRA, the Consolidated Omnibus Budget Reconciliation Act, has been around for nearly four decades, yet many are still confused about how it works. We debunked a few common myths about COBRA coverage below:
Myth #1 – “Every employer has to offer COBRA coverage”
While many employers do offer COBRA coverage, COBRA only applies to employers that have at least 20 employees, with part-time employees counting as a fraction of a whole employee. Additionally, employers that do not offer health plans for their employees also do not provide COBRA insurance. However, many states do offer insurance programs that operate much like COBRA to help out employees of smaller organizations.
Myth #2 – “I only qualify for COBRA if I am let go by my employer”
A lot of people believe that only recently unemployed workers qualify for COBRA coverage. However, a number of different qualifying events are eligible such as life changes like divorce, reduced work hours, and voluntarily leaving employment. The law is designed to help workers and their families maintain healthcare coverage when a qualifying event occurs.
Myth #3 – “I don’t have to do anything for COBRA benefits to start”
This is a common misconception that leads to people being unintentionally uninsured. Both the employee and employer must do several things within certain time periods for insurance coverage to continue. First, the employer must provide the employee with a notice regarding the employee’s COBRA rights, as well as notify its insurance plan administrator within 30 days; the administrator is then required to provide this information to the employee within 14 days. From there, an additional 60 days is provided to the employee to determine whether or not to continue coverage. If the coverage is accepted, premiums must be paid within 45 days.
Myth #4 – “COBRA coverage isn’t the same as my normal insurance”
Under COBRA, an employee continues with their same insurance plan as before. While the level of coverage remains the same, the employee is now responsible for the premiums rather than the employer.
Interested in learning more about COBRA? This post details how it works, who is eligible, what it costs, and more.