What is COBRA?

In 1985 Congress passed a law requiring most companies (with 20 or more emploees) offering group insurance to offer employees the ability to continue the same health plan if they were laid off or terminated. In most cases, the insurance can be continued for 18 months. The employer no longer pays any part of the premium, and may add up to 2% of the premium to cover the cost of administering a plan for a non-employee. You could be required to pay 102% of the premium.

It is important to note that COBRA is not an insurance policy. COBRA is a law that allows you to continue you group insurance if you are laid off or terminated.

COBRA is considered "minimum essential coverage" under the Affordable Care Act; therefore, you are not subject to the tax penalty for not having insurance during the time your COBRA is in force.

ACA and COBRA Options
If You: Can enroll in ACA plan? Apply for Premium Tax Credit and Cost Sharing Reduction?
Refuse COBRA Yes Yes
COBRA expires outside OEP* Yes Yes
You cancel COBRA during OEP* Yes Yes
You cancel COBRA outside OEP* Not until OEP* Not until OEP*

*OEP is the annual Open Enrollment Period that last from November 1, 2016 to January 31, 2017.