COBRA 101

COBRA coverage can end early if:

• You fail to pay the premium before the end of the grace period -- and there is no reinstatement of coverage either.
• The employer ends group health insurance coverage for all workers. For example, if the employer stops offering health insurance to the active employees or goes out of business. As long as the employer covers any employees under a health insurance plan, even if it's not at your location or not the same division or subsidiary, you must be offered continuation under the existing plan.
• You, as an employee or as a dependent, become covered by Medicare or by other group insurance that covers you, so long as the new coverage does not have a limitation or exclusion based on a pre-existing condition. However, if you become entitled for COBRA continuation after you become eligible for Medicare, you may continue them both. For example, if you work past age 65, start Medicare at 65, then stop working at age 67, stopping work would trigger 18 months of COBRA. If, however, you stopped working at age 64 and started your COBRA coverage, instead of having COBRA continuation for 18 months, your right to continue COBRA would end when you turn 65 and become eligible for Medicare. 

The time period during which health coverage may  be continued under COBRA varies depending on:

• The identity of the person in question and
• Whether the covered employee stops working because of "disability" or for any other reason.

Health insurance coverage can be terminated sooner if certain events occur, such as non-payment of premium.

Termination events are different for terminating employees as well as for spouses and dependent children.

Terminating employees

• When the term runs out. 
  • Terminating employees who stop work for any reason other than disability: may continue their coverage for up to 18 months from the date of the qualifying event.
  • Terminating employees who lose coverage because they stop working because they  are "disabled" when they stop work, or become disabled within 60 days of stopping work may continue their coverage for an additional 11 months for a total of 29 months from the date of the qualifying event  if they follow the rules. (To learn more, see, How To Apply For A COBRA Extension Because Of Disability.)
• Earlier in the following events:
  • Non payment of the premium
  • When the employee obtains other health insurance and the new coverage does not contain an exclusion or limitation with respect to pre-existing conditions
  • When the employee becomes eligible for Medicare
  • The employer ceases to maintain a group health plan;
  • The coverage is provided by a managed care arrangement (PPO or HMO); and the beneficiary moves out of the servicing area of the plan

Spouses and dependent children

• Divorce or legal separation from the covered employee: Spouses and dependent children may continue their coverage for 36 months from the date of the divorce of legal separation.
• Employee stops working:
  • Not because of disability: Spouses and dependent children may continue their coverage for 18 months from the date of termination of a non-disabled employee.
  • Employee stops working because of disability: Spouses and dependent children may continue their coverage for 29 months from the date of termination of a disabled employee.
• If an employee becomes entitled to Medicare (either before or after the spouse retires), the spouse and children can continue COBRA coverage for 36 months from the date of the spouse's retirement.
• Loss of dependent child status: dependent child can continue coverage for up to 36 months

When COBRA ends, you are guaranteed the right to convert to an individual health plan thanks to the Affordable Care Act (sometimes referred to as "Obamacare.")

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