When COBRA Kicks In

Health Care & Insurance

How to Keep Health Coverage When You Leave a Job

The Consolidated Omnibus Budget Reconciliation Act lets you continue your coverage.

If you leave a job that provided health insurance, you may have the right to continue your coverage for 18 months or more (29 months if you're disabled) under a federal law called the Consolidated Omnibus Budget Reconciliation Act, or COBRA.

You won't qualify for COBRA if your company has fewer than 20 employees, or if you work for a church or the government of a U.S. territory or the District of Columbia. Federal employees are covered by different rules, and some states provide protection for people to whom COBRA doesn't apply.

If you do qualify, you must pay the employer's premium plus a 2% administrative fee. COBRA can help if you get bumped from a group health insurance plan under the following circumstances:

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-- You lose or leave your job for reasons other than gross misconduct, or your hours are cut so that you no longer qualify for coverage under the employer's plan.


-- You and your dependents are covered under your spouse's group plan and your spouse dies or becomes eligible for medicare, or you get divorced. This coverage lasts 36 months.

-- You are too old to continue coverage under a parent's group plan. Under COBRA, you can get 36 months of coverage.

-- Your spouse and dependents have group coverage as part of your retirement package and your employer files for Chapter 11 bankruptcy protection. As long as your employer stays in business, you can continue coverage until you die or find another policy. If you die, your spouse and dependents can continue COBRA coverage for up to 36 months.

-- Your new policy has a waiting period for coverage. You can continue coverage under your old policy until the waiting period is past.