How long do you have to decide on COBRA coverage?
There is a window, it is longer than most people think, and it is meant for comparing. Here is how the clock actually runs.
COBRA lets you keep the group health plan you had at work after you leave, for a limited time, usually at your own expense. The rules that govern it come with a set of deadlines. Knowing them turns the packet from a scare into a schedule.
Who COBRA applies to
Federal COBRA covers group plans at employers with 20 or more employees. Many states have their own continuation rules for smaller employers, Texas among them, and the details differ. If your former employer is small, ask which rules apply before you assume anything.
How the clock runs
- The notice. After you leave, your employer tells the plan, and the plan administrator sends you an election notice. Between them they have up to 44 days to get it to you.
- Your election window. You have at least 60 days to decide, counted from the date of the notice or the date your coverage ended, whichever is later.
- The first payment. Once you elect, you have 45 days to make the first payment. Coverage is retroactive to the day the old plan ended, so there is no gap on paper once you pay.
- Later payments. Each monthly payment carries a grace period of at least 30 days.
- How long it lasts. Generally 18 months after leaving a job, and up to 36 months for some other qualifying events.
What it costs
Under COBRA you can be charged the full premium, the part your employer used to pay plus the part you paid, plus an administrative fee of up to two percent. For most people that is the first time they see the whole number, and it is why the packet feels so expensive.
What the window is for
The 60 days are there so you can compare. Leaving job-based coverage also opens a special enrollment period for other plans, and that window is also limited, so the two clocks run side by side. Use them to put COBRA next to the alternatives: what each costs per month, whether your doctors are on each list, and what your worst year looks like under each.
One caution. Until you elect and pay, you are not covered, even though the coverage will be backdated once you do. If something happens in the meantime, you would elect and pay to have it covered.
Where COBRA tends to make sense, in general.
- You are mid-treatment and changing plans would mean changing doctors or restarting a deductible.
- You have already met most of this year's deductible and the year is nearly over.
- The gap you need to cover is short, and the employer plan is the simplest bridge.
Where it tends not to: the full premium is more than a comparable plan would cost you, and your doctors are on the other plan's list too.
If the packet is on your table, bring it to the call. Reading the deadlines and the alternatives side by side is a twenty-minute job.