Employees looking for affordable health insurance after they lose employment are eligible for health insurance through the Affordable Care Act (ACA) marketplace, but only if they have not chosen to get COBRA coverage. Comparing costs and benefits under the ACA with COBRA coverage will help qualified beneficiaries identify the most affordable health insurance coverage.
Employers have 14 days from the time they know that a qualifying event has taken place to notify the employee or other qualified beneficiaries of their rights under COBRA. This communication, called the election notice, must have:
- All the information needed to understand COBRA benefits and make an informed decision about them
- Name of the COBRA administrator
- Instructions on how to elect or refuse COBRA coverage
- Places to go to get more information
Employees have at least 60 days to decide whether to elect COBRA coverage, which is generally done by filling out, signing and returning a form provided with the election notice. If they do elect to be covered by this unemployed insurance plan, coverage is retroactive to the date when the previous coverage ended. Qualifying beneficiaries who are covered by COBRA for any amount of time are not eligible to sign up for health insurance under the ACA until the next open enrollment period.
The employee is responsible for paying the premium for this period while making the decision. However, the federal government will be paying for 100% of COBRA premiums from April 1, 2021 to September 30, 2021 under the American Rescue Plan for those who have been laid off and have not been able to get new employer-based coverage during this period.
If the employee at first decides not to get COBRA, he or she can change his or her mind as long as it is within the 60-day window.
In that event, COBRA would not be retroactive to the end of the original coverage but would start when the election is made.
If you choose to be covered by COBRA and the insurance company denies continuation coverage, the insurance company is required to notify you of this within 14 days of your request and to list the reason for denying the request.
Each of the adult qualified beneficiaries can make his or her own decision regarding COBRA health insurance. For example, an employee may decide to get the continuation coverage while the employee’s spouse may opt-out. The employee or the spouse would be responsible for making the decision for any dependent children.