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If you are terminated or leave your job, you may be eligible for COBRA insurance, which provides health insurance coverage to people who become unemployed or those who had their work hours cut. COBRA provides the same group health plan as the previous employer, but for a limited time.

Sounds great, right? Unfortunately, COBRA health insurance coverage is very expensive. Your former employer no longer foots its portion of the bill, so you have to pay the entire health care bill. 

Take the time to learn what COBRA insurance is, what you can expect with COBRA health insurance, the different problems you may face as a COBRA recipient, and how to resolve these issues. But cost isn’t the only problem with COBRA — there are other complications that can arise as well.

Here are the most common COBRA problems and how to resolve them:

Key Takeaways

  • COBRA is health insurance for unemployed people who recently lost their work-based group health plan coverage.
  • COBRA insurance lets you keep your coverage from group health plans, but it’s expensive and former employers don’t help pay the premiums.
  • Some problems can arise with COBRA, but there are ways to resolve those issues.
  • COBRA health insurance starts immediately after your coverage ends with the former employer and you can usually keep it for up to 18 months.
  • Losing your employer-sponsored health insurance is a qualifying event that also lets you sign up for a health insurance marketplace plan.

No. 1: You don’t receive your COBRA paperwork or your notice is late

Your previous employer has up to 30 days from your last day of health insurance coverage to notify the provider of your COBRA eligibility. When the insurer receives this notice, it must notify you of your health insurance options. After you receive your notice from the health insurance company, you have 60 days to enroll in COBRA. 

If your employer fails to notify the plan, you can contact the Department of Labor (DOL). The DOL fines companies that do not provide COBRA information within the proper time limits. You can also contact the benefits administrator at your previous company to ensure you receive the COBRA paperwork in time.

Alternatively, contact a COBRA administrator at the Department of Labor by phoning 866-444-3272, recommends Brad Cummins, owner/principal agent at Insurance Geek, an online insurance broker.

No. 2: You never receive your COBRA insurance enrollment packet

Sometimes, the COBRA enrollment packet never comes. Cummins points out that this can happen because of administrative errors, or because your employer may not realize you are eligible for COBRA and that they’re obligated to provide coverage.

“This can occur when employers — often smaller companies without in-house human resources personnel — neglect to provide the required COBRA information notice,” says Brian Martucci, finance editor at Money Crashers, an online publication dedicated to providing financial literacy for its readers. “If this happens to you, ask your HR point of contact to provide the enrollment packet.”

No. 3: You paid your COBRA premiums, but the insurance company never received them

Here’s another possible snafu: Your COBRA premium is paid in full, but the insurance company claims they never got it.

In this case, you should immediately contact your previous employer and the Department of Labor (866-444-3272).

“This can be caused by banking errors, technical errors, and using the wrong information,” Cummins says. “You are at risk of losing all your COBRA rights if your payments are not paid within the grace period, so do not delay.”

Also, keep a record of every payment you sent, such as a check copy or bank statement and “provide them to the insurance company if necessary to prove that you are not at fault for nonpayment,” Martucci says.

No. 4: Your employer goes out of business or cancels your health insurance plan

If your former employer goes under, you and other COBRA-eligible employees will only be covered only for as long as the employer’s health plan exists, Martucci says. 

Once COBRA insurance coverage lapses because of the employer’s nonpayment of premiums, you no longer have health insurance.

However, this doesn’t mean you won’t be able to get health insurance coverage — losing your group coverage is a qualifying event that starts a special enrollment period on the health insurance marketplace through the Affordable Care Act. 

“This gives you 60 days to enroll in an Obamacare marketplace plan, even if it’s outside the normal open enrollment. Others may choose to explore increasingly popular concierge or direct-care services on the private health insurance market,” says Mark Waterstraat, chief customer officer at Alegeus. 

No. 5: You enrolled in COBRA and paid your premiums, but your doctor says you don’t have coverage

As if COBRA wasn’t challenging enough with its high costs and complications, it’s also possible your doctor may deny treating you and claim you don’t have coverage.

“This could be a network issue — your chosen provider isn’t actually in your plan’s network — or due to an issue with the plan itself, like if you sought care for a service not covered by the plan,” Martucci says. “On the other hand, this could arise because of some action or non-action taken by your employer, such as nonpayment of premiums or cancellation of the plan itself. Contact your plan administrator or insurer for more information.”

No. 6: Your employer switched plans and you didn’t get the new health plan information

Rest assured that if your employer abruptly switches health insurance plans, you’re still entitled to receive insurance coverage.

“Report your employer to the Department of Labor (866-444-3272) if the company you work for has more than 20 employees and you are eligible for COBRA coverage,” Cummins says.

This is often an issue caused by poor human resources processes at your former company.

“Contact your HR representative to obtain the new health plan information. Your employer is required by law to provide it, and you are automatically covered under the new plan,” Martucci says.

No. 7: Your COBRA premium increased substantially with no warning

Your insurer may raise COBRA premiums or your employer may change health plans after you leave, which could result in higher premiums.

“Unfortunately, this is a common occurrence in the world of group health coverage, and there is nothing COBRA recipients can do about it short of letting their coverage lapse and seeking a cheaper plan on the marketplace or private health insurance market,” says Martucci.

No. 8: You switch jobs and your new health insurance doesn’t start for 90 days

The good news is that you have a new job. The bad news is that enrollment in your new company’s healthcare plan won’t be available to you for three or more months. What should you do?

“If you switch jobs, you can still stay on COBRA for up to 18 months as you wait for your new coverage to kick in,” says Cummins.

That can be expensive, of course, but you can always bridge the gap with short-term health insurance coverage or a marketplace plan.

Short-term health insurance plans are significantly cheaper than regular health insurance plans and are a great alternative when you have a health insurance coverage gap.

Frequently Asked Questions

When should I receive COBRA information?

You should get your COBRA information no later than 44 days after losing your coverage, whether on the day your hours were reduced or thereafter. You should receive a written election notice from the group health plan explaining your right to elect COBRA continuation coverage. 

This notice should explain how long you and/or your family will have to decide whether or not to elect COBRA continuation coverage. 

The federal law demands that plan must give you at least 60 days from the date the notice is provided to you, or from the date your coverage ended, whichever is later, to elect continuation coverage.

Who is responsible for sending COBRA notices?

The administrator of your COBRA benefits plan is responsible for sending COBRA election paperwork to you. This can be a third party or your employer.

How long does it take to receive COBRA paperwork?

Typically, you should receive COBRA paperwork within 44 days of your last day at work. Employers are responsible for sending COBRA paperwork to their employees via the plan administrator, which may be the employer or a third party.

Does COBRA start immediately?

COBRA health insurance for a covered employee should begin immediately after your last day of work and coverage is continuous until COBRA expires, up to 18 months later. 

Eligible individuals, such as dependents, may qualify for COBRA coverage for up to 36 months, depending on the circumstances, including death, divorce or legal separation. 

Your first premium may not be due until days or weeks after your final day of employment, but premiums must be paid retroactively to avoid a lapse in health plan coverage.

Can an employer deny you COBRA?

Your employer can deny you COBRA benefits if you were terminated for gross misconduct.

“However, an employer can effectively deny COBRA coverage by canceling its group health insurance plan entirely,” says Martucci.

Can I get COBRA if I was fired?

If you were fired for gross misconduct, your employer can deny you COBRA coverage. 

“If you are fired for any other reason, you have the right to demand COBRA coverage,” says Cummins.

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