Alliant Health Insurance

COBRA Alternative

What is Federal COBRA? The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that was passed in 1986, allowing individuals and their families who lose their employer-based group health insurance the ability to continue on the health plan for a limited period of time.To learn more about Federal COBRA please log on to the United States Department of Labor website at

Who is eligible for Federal COBRA? Generally, those employees and dependents that have been covered by a group health insurance plan through a private employer that had at least 20 or more employees more than 50% of the prior calendar year. Each part-time employee is counted as a fraction based on the number of hours worked.

What is California COBRA (Cal-COBRA)? Generally, those employees and dependents that have been covered by a California based group health insurance plan through a private employer with 2-19 employees are eligible for Cal-COBRA. Cal-COBRA is also available to California individuals and families who exhaust Federal COBRA.

How do I learn about if I am eligible for COBRA? Your employer is required to notify you, when you are hired, of your rights to future COBRA continuation and again later if you experience a qualifying event that makes you or your dependents eligible to enroll in COBRA. There are certain timelines your employer and the insurance company must follow to adhere to the COBRA notification laws.

What is a qualifying event? Qualifying events are certain situations that would cause an individual and their dependents to become eligible for COBRA continuation. Some examples of qualifying events are:

  • Employment ends
  • Employee’s hours are reduced below the eligibility requirement to maintain health insurance
  • A divorce or legal separation
  • No longer an eligible dependent
  • An employee enrolls in Medicare
  • An employee dies and leaves surviving dependents

Why would someone want to enroll in COBRA? COBRA helps provide individuals and families continuity of their health insurance and the time to transition to another health insurance plan. It may take a person time to find a new job and to enroll in another employer-sponsored group health insurance plan, or to go through the application process for an individual health insurance plan. Standard individual health insurance plans are subject to medical underwriting and are not ‘guarantee issue’ in most states; therefore, it is often recommended that a person maintain health insurance through COBRA continuation until they secure replacement coverage.

What is the cost of COBRA? In most cases with federal COBRA, the premium cannot exceed 102% of the cost of the insurance. That means the former employee will pay 100% of the premium cost that was being charged to the employer (or shared between the employer and employee) plus 2% for administrative costs. For California COBRA (Cal-COBRA), the premium cannot exceed 110% of the cost of the insurance. Californians who either exhaust Federal COBRA or work for a company with less than 20 employees and are enrolled in a group health insurance plan, may be eligible to enroll in Cal-COBRA, which can cost 100% of the of the premium cost that was charged to the employer (or shared between the employer and employee) plus 10% for administrative cost.

How do I enroll myself or my dependents in COBRA? Your former employer, a COBRA administrator, or the health insurance company will send the necessary paperwork for you and your dependents to enroll in COBRA. As a starting place, we recommend you contact the person at your former employer who administers the employee benefits to learn more about COBRA.

When does Federal and California (Cal-COBRA) COBRA end? For California residents, enrollees can remain on Federal COBRA for up to 18 months followed by 18 months of Cal-COBRA, for a total of 36 months of coverage. If you and any eligible dependents are eligible for Cal-COBRA you can remain covered for up to 36 months.

Are there any alternatives to COBRA? We always recommend individuals and families not miss the window of time to enroll on COBRA. That allows time to research other options and plan how to transition to another health insurance plan. Once you miss the initial election period to sign up for COBRA, you generally cannot get that opportunity back. While in the COBRA election period or once you have enrolled on COBRA, the alternatives to consider in the future will be: 1) a new employer’s health plan once you have met eligibility, 2) applying for an individual health insurance plan which may be at a much lower monthly premium, and 3) COBRA has been exhausted you may be eligible for a HIPAA ‘guarantee issue’ individual health insurance plan if you cannot qualify for a standard health insurance plan.

To learn more about COBRA alternatives, please call us to speak with one of our representatives.