How to Qualify for COBRA If I Quit?

A gavel and stethoscope on a wooden table.
Image Credit: Feverpitched/iStock/Getty Images

If you leave your job, the Consolidated Omnibus Reconciliation Budget Act -- more commonly known as COBRA -- may allow you to stay on your employer's health plan for a year and a half. It doesn't matter whether you quit or whether your boss fired you, unless you were fired for gross misconduct. Otherwise you can keep your insurance, provided your employer's plan is covered by COBRA rules.

Employers Who Qualify

If your employer didn't have a health plan, or you weren't covered by the plan, COBRA can't provide you with health benefits. Even if the company had a plan, some small employers aren't covered. The Department of Labor says COBRA doesn't apply to private-sector employers with less than 20 employees, though some state laws apply an identical rule to smaller companies. The federal government's many branches and agencies aren't covered by COBRA, though state and local governments are. Churches and some religious organizations are exempt.

Applying for COBRA

If your employer's plan falls under COBRA, you should have that information in the handbook for your health insurance. Whoever handles employee benefits at the company can provide more information. When the qualifying event is you leaving your job, the employer should notify the insurer for you. The plan administrator then has to contact you and offer to sign you up for COBRA. This should happen no later than 14 days after quitting. You have up to 60 days to decide if you want to enroll.

Paying the Premiums

Under COBRA, you qualify for exactly the same benefits you had before you quit, unless the benefits change for current employees. However, you may have to pay more. If the employer paid part of your premiums, the company can require you pay the full amount, which will increase your costs. The insurer can charge you up to 102 percent of the premium cost, with the extra 2 percent reflecting administrative costs.

COBRA Alternatives

If the price of COBRA is more than you can afford, consider alternatives. For example, if your spouse is covered by her own employer, quitting your job may qualify you for coverage under her plan. Leaving your job and your old plan also qualifies for a special enrollment period under the federal Affordable Care Act. You can search for cheaper plans in the healthcare marketplace.

references & resources