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COBRA and Unemployment

Recently Unemployed? Need Benefits? COBRA Health Insurance


Employer-based group health insurance provides coverage for millions of Americans. Unfortunately, many employees are without coverage if they have lost their job or the company goes out of business. In most cases, an employee can elect COBRA upon losing employment. COBRA will provide up to 18 months of additional coverage as long as the employer consists of 20 or more employees.

For those employees who elect COBRA, the expense can be significant. Ultimately, the cost will be determined by the premiums for the former plan plus a 2 percent administrative fee. Former employees are often surprised to discover how much it will cost to elect their company insurance through COBRA upon termination, since employees often pay the full premium without their employer’s contribution to the plan.

The American Recovery and Reinvestment Act which President Obama signed in February 2009 and the subsequent amendments to the law provides relief to unemployed workers paying for COBRA health insurance. The federal subsidy for COBRA health care benefits helps make health insurance more affordable to the unemployed by subsidizing 65 percent of the cost.