Continuation coverage allows someone who recently lost their employer-based health coverage to continue their current insurance policy as long as they pay the full monthly premiums.
Continuation coverage falls into four categories: COBRA, Cal-COBRA, Conversion, and HIPAA.
COBRA and Cal-COBRA
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. COBRA allows former employees, retirees, and their dependents to temporarily keep their health coverage. If you get COBRA, you must pay for the entire premium, including any portion that your employer may have paid in the past. This means your payment is often more expensive than what you paid as an employee.
You can collect COBRA benefits for up to 18 months. This may be extended to 36 months under certain circumstances.
If your employer has 20 or more employees, it must follow COBRA rules. COBRA coverage follows a "qualifying event". An example of a qualifying event would be if your hours were reduced or you lost your job (as long as there was no gross misconduct). Your employer must mail you the COBRA information and forms within 14 days after receiving notification of the qualifying event. You are responsible for making sure your COBRA coverage goes into and stays in effect - if you do not ask for COBRA coverage before the deadline, you may lose your right to COBRA coverage. You must decide to accept or reject COBRA coverage during a certain time period (usually 60 days after your employer notifies you). You must pay your monthly premiums or you can lose your coverage.
Once you have used up all your COBRA benefits, you may be able to get an extension of coverage under Cal-COBRA. When all COBRA/Cal-COBRA extensions are exhausted, you can get individual health insurance under HIPAA (see below) or you may purchase a policy on the individual market.
You can compare your COBRA premium with a similar policy on the individual/family market to find out which is best for you. Some factors to consider are:
- Are the benefits the same?
- Will I still be able to see my provider or go to the same hospital?
- If you qualify for a federal premium subsidy, you will not be able to collect it unless you purchase an individual/family plan though Covered California - California's Healthcare Marketplace.
Conversion and HIPAA
To use either Conversion or HIPAA continuation coverage options, you must first use up all of the COBRA or Cal-COBRA that you qualify for. While conversion coverage allows you to by an individual/family policy with the same insurance company that offered your group policy, HIPAA allows you to buy it from any company that sells individual/family policies. Once again, you pay the entire premium.
Do your Homework
There are many reasons why using continuation coverage might make sense for you. You may want to keep your doctor or hospital, for example. On the other hand, in the past, many people used continuation coverage because insurers wouldn't sell them an individual/family policy due to a pre-existing condition. Because the Affordable Care Act has changed the way health insurance is sold, we encourage you to compare the costs, benefits, and quality of your COBRA coverage with a policy you could purchase yourself. Visit our Shopping for Individual/Family Coverage page for more information and helpful tools.