COBRA Insurance Eligibility

Understand the requirements to qualify for COBRA insurance



Under the COBRA (Consolidated Omnibus Budget Reconciliation Act), the federal government set up specific eligibility requirements for people wanting to continue their health insurance coverage using COBRA. In order to be able to continue to use your previous employer’s group health insurance plan, you must be all three requirements set forth in the law.

The law also speaks to the COBRA insurance eligibility of spouses, children, and any other dependents and what events and requirements need to be present for them to qualify for COBRA insurance. Understanding these eligibility requirements will help you know if you can enroll in COBRA insurance. However, if at any point you are unsure if you and your family qualify for COBRA insurance you can always reach out to your former employer.

The Basics of COBRA Insurance Eligibility

Under the federal COBRA insurance law, most employees are eligible to continue their health insurance coverage with COBRA if they:

  • Work at a company with over 20 full time employees or their part time equivalents
  • Were terminated, laid off, retired, or quit their job without gross misconduct (serious offenses)
  • Lost their health insurance due to a reduction in hours that made them ineligible for the health insurance plan
  • Were previously covered under the plan including spouses, children, and other dependents

Specific COBRA Insurance Eligibility Information

Specifically, the COBRA insurance laws lay out three key conditions that qualify you and your family for COBRA insurance. These include the type of insurance plan provided by your company, the people eligible for coverage under the plan (i.e. spouses, children, and dependents), and the event that caused you to lose your health insurance. These three requirements are known under the COBRA insurance law as the qualifying plan, qualifying beneficiaries, and qualifying event. To receive COBRA insurance, you need to meet all three requirements. In order to receive COBRA insurance you must meet all three requirements.

Type of Insurance Plan Coverage

To be eligible to continue COBRA insurance coverage, the group health insurance plan provided by your previous employee, must cover at least 20 employees or their part time equivalents for 50% of its normal business days. Your employer can tell you if the company plan qualifies and that is normally the easiest way to find out if you are not sure.

Qualified Beneficiaries

Fortunately, the federal COBRA insurance law, not only covers the employee but also any qualifying beneficiaries. This normally includes anyone who was previously covered, and could include new beneficiaries that can be added during open enrollment or due to a qualifying event (i.e. marriage, etc.) In most cases, this includes the covered employee, spouse, and dependent children. If you are a retiree, this usually includes the retiree, retiree’s spouse, or retiree’s dependent children. Depending on your plan agents, independent contractors, and directors who were previously part of your plan may also qualify for COBRA insurance, as well as their beneficiaries in most cases.

Type of Qualifying Events

The final requirement, known as the qualifying event, refers to the manner in which you lost your health insurance coverage with your employer or as a beneficiary. This could include losing your job, being laid off, being terminated, quitting, retiring, or having your hours reduced. It is also important to now that qualifying events differ for each beneficiary. (i.e. spouses, children, etc.)

Covered Employee

  • Voluntary or involuntary termination of employment for any reason other than "gross misconduct"
  • Reduction in the number of hours of employment

Spouses

  • Voluntary or involuntary termination of the covered employee's employment for any reason other than "gross misconduct"
  • Reduction in the hours worked by the covered employee
  • Covered employee's becoming entitled to Medicare
  • Divorce or legal separation of the covered employee, Death of the covered employee

Dependent Children

  • Loss of "dependent child" status under the plan's rules
  • All qualified events listed under spouses