The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employers with group health insurance plans to offer their employees the opportunity to continue their health coverage under their employer's plan even after they have been terminated or laid off or had another change in their employment status.
When employers offer health coverage to their employees, they usually pay part of the monthly premium for their employees. If an employee loses his or her job, COBRA allows the employee to continue to be in the employer’s group health plan, usually at the full cost of the premium (with no employer contribution), and with an administrative fee added.
If your employer offers COBRA coverage when you leave a job, you have options:
The choice of whether to enroll in coverage through COBRA or through Covered California is up to you, but here are some factors to consider:
Depending on your income, you may qualify for financial help from the federal government, state government, or both to help pay for a health insurance plan with Covered California. Financial help may make a difference when comparing the costs of COBRA coverage and Covered California plans. Covered California’s Shop and Compare Tool can estimate financial help and the cost of plans with Covered California.
Starting in 2020, if you go without health insurance coverage in California, you may face a penalty when you pay your state taxes. Both COBRA coverage and Covered California plans qualify as sufficient coverage to avoid being charged the penalty, so choose coverage based on cost and on the doctors and medical services that are best for you.
Most consumers will pick either COBRA or Covered California, but some may need to pick both to avoid a gap in coverage. Before doing this, keep in mind these guidelines:
If you enroll in COBRA coverage and the special-enrollment period described above lapses, you cannot cancel your COBRA coverage and enroll in a Covered California health plan until 1) your COBRA coverage is exhausted, 2) you have a different qualifying life event for special enrollment, or 3) the next annual open-enrollment period.
If you stop paying your COBRA premium and lose coverage, you will not be eligible for special enrollment through Covered California. You will only qualify for special enrollment if:
If none of these reasons apply, you will have to wait until the next Covered California open-enrollment period to cancel your COBRA plan and sign up for a Covered California health insurance plan, unless you have another reason (known as a qualifying life event) for special enrollment. It’s also important to know that if you decide to drop or forgo COBRA and enroll in a Covered California plan, you cannot change your mind and go back to COBRA.
Much like federal COBRA, Cal-COBRA is a California law that lets you keep your group health plan when your job ends or your hours are cut. It may also be available to people who have exhausted their federal COBRA.
Cal-COBRA applies to employers and group health plans that cover from two to 19 employees. Read more about Cal-COBRA.