COBRA, short for the Consolidated Omnibus Budget Reconciliation Act of 1985, is a federal law that helps you and your family keep your employer’s group health insurance for a limited time when life throws you a curveball. Whether it’s a job loss, reduced work hours, divorce, or even the death of a covered employee, COBRA ensures you don’t lose access to crucial health coverage when you need it most.
COBRA typically applies to private-sector employers with 20 or more employees. But don’t worry, if you work for a smaller organization — states like California have mini-COBRA laws (like Cal-COBRA) that extend these protections to businesses with fewer than 20 employees. Both full-time and part-time employees count when determining who’s eligible.
Even state and local government employees are covered under COBRA, though federal employees and workers for churches or church-related organizations are not. So, whether you’re navigating a major life event or just want to understand your options, COBRA and its counterparts like Cal-COBRA are here to give you peace of mind and keep you covered.
COBRA and Cal-COBRA Qualification
Groups of 2 to 19 Employees
Cal-COBRA gives employees the chance to keep their group health coverage even after leaving a job or losing benefits. Plus, if you’ve already used up your federal COBRA benefits, Cal-COBRA might still have you covered. More details are below.
With Cal-COBRA, you could keep your group health coverage going for up to 36 months.
Groups of 20 or More Employees
Federal COBRA offers employees a coverage extension of 18-36 months. If you qualify for an 18-month extension, you can get a second 18-month extension through Cal-COBRA.
Eligibility
COBRA ensures that continuation of benefits is made available to:
- covered employees
- former employees
- spouses of covered employees
- former spouses, and
- dependent children.
COBRA kicks in when group health coverage would normally end because of certain events, including:
- A covered employee’s death
- A covered employee’s job loss or reduction in hours for reasons other than gross misconduct
- A covered employee’s becoming entitled to Medicare
- A covered employee’s divorce or legal separation
- A child’s loss of dependent status (and therefore coverage) under the plan.
COBRA sets rules for:
- when plan sponsors must offer and provide continuation coverage
- how employees and families may elect continuation of coverage, and
- what circumstances justify terminating continuation coverage.
You or your family member might have to pay for COBRA coverage, and the premiums can’t be more than the full cost of the plan plus a 2% admin fee.
Sometimes, employers help cover the cost of COBRA, but most of the time, you’ll be responsible for paying the full amount, including that small admin charge.
Keep in mind, you and your dependents might qualify for other coverage options that could save you money compared to COBRA continuation.
An individual health plan from an Affordable Care Act (ACA) Marketplace could be cheaper than COBRA. In 2024, Covered California reported that 90% of enrollees received financial assistance, with an average of $5,000 per year to help lower health insurance costs. This means more than half of Californians could pay less than $10 a month for post-employment coverage.
Another option may be a “special enrollment” in other group health coverage. Under the Health Insurance Portability and Accountability Act (HIPAA), in certain cases, group health plans are required to let individuals and their eligible dependents enroll, even if they previously declined coverage.
If an employee loses group health insurance through a spouse, they can enroll in their employer’s health plan. They must request special enrollment within 30 days of losing the other coverage.
If you or a family member is 65 or older, or younger with a disability or End-Stage Renal Disease, Medicare may be a third option. For details, visit the U.S. Department of Health and Human Services website.
The qualifying event decides who is eligible for COBRA. This can include situations like employer bankruptcy or cases involving a retiree, their spouse, former spouse, or dependent child. Other eligible beneficiaries might include a child born to or adopted by a covered employee while they are insured. Independent contractors and directors enrolled in the employer’s group health plan may also qualify.
COBRA, generally, does not apply to someone losing a job due to “gross misconduct.”
COBRA FAQs
For answers to frequently asked questions about COBRA, visit the U.S. Department of Labor, Employee Benefits Security Administration, FAQs online.
For a Q&A on Cal-COBRA, visit the California Department of Managed Health Care website.
Your group’s health insurance broker can also be a valuable resource. As a CaliforniaChoice customer, you can also contact Customer Service for help.