An employee is given an election period of 60 days to elect COBRA coverage after leaving the company. In most cases, health insurance coverage will continue until the end of the month.
There is an election period of at least 60 days, which starts after coverage ends or when the election notice is given, whichever is later.
Cost of Coverage
The COBRA beneficiary has the right to continue coverage and must make arrangements with the plan administrator to pay for coverage. The cost of continued coverage is 102% of the monthly cost of the plan. In California, CalCOBRA applies to employer groups with less than 20 employees. Under CalCOBRA, the monthly cost of coverage is 110% of the monthly cost of the plan.
Unless the employer makes arrangements to provide COBRA subsidy, the beneficiary is responsible for the cost of COBRA coverage. This can result in significant monthly costs because there is no more employer contribution to the cost of health insurance.
Employer Contribution During Employment
In general, employers pay between 50% to 100% of the employee premiums during full-time employment. Frequently, dependent costs are covered also.
Qualifying Event For Enrollment Into Other Health Insurance
Because the loss of employer-based group coverage is a qualifying event, an alternative to COBRA coverage is to purchase an individual health plan. This may be less expensive, especially if premium assistance is available due to lower income levels.
COBRA Rates vs. Other Health Plans
Alternatively, the COBRA rates may be more favorable because coverage under a large employer plan is generally not based on age, and older beneficiaries receive the same rate COBRA rates as younger members.
No Gap In Coverage Permitted
If the COBRA election is made at the end of the 60 day election period, the beneficiary will be responsible for retroactive premiums so there is no gap in coverage.