Can I Cancel COBRA Coverage at Any Time?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides a temporary extension of employer-sponsored health coverage for individuals and their families following certain qualifying events, such as job loss or a reduction in work hours. Individuals can generally cancel their COBRA coverage at any time.

Voluntarily Ending COBRA Coverage

The simplest method to end coverage is to stop making the required premium payments. COBRA coverage is typically month-to-month, and ceasing payment will lead to its termination.

For a more formal cancellation, notify the COBRA administrator or former employer in writing. This notification should clearly state the desire to terminate coverage and specify the intended effective date. The cancellation usually becomes effective at the end of the premium period for which the last payment was made. For instance, if premiums are paid through November and an individual wishes to cancel for December, they would simply refrain from paying the December premium.

Automatic Termination of COBRA Coverage

COBRA coverage can also end automatically without any direct action from the individual, under specific circumstances defined by law. One common reason for automatic termination is reaching the maximum coverage period. Generally, COBRA coverage lasts for 18 months following a job loss or reduction in hours. Certain qualifying events, such as the death of the covered employee, divorce, or a dependent child losing eligibility, can extend coverage for a spouse and dependents up to 36 months. An extension to 29 months is possible for individuals determined to be disabled by the Social Security Administration during the initial 60 days of COBRA coverage.

Coverage also terminates automatically if the individual becomes covered under another group health plan after electing COBRA, or if a qualified beneficiary becomes entitled to Medicare benefits (Part A or Part B).

Failure to pay premiums on time is another significant cause for automatic termination. While there is typically a grace period, often 30 days, for premium payments, non-payment by the end of this period will result in the cessation of coverage. Plans are not obligated to send monthly premium notices, so beneficiaries must track payment due dates themselves.

Navigating Post-COBRA Health Coverage

Upon the termination of COBRA coverage, whether voluntarily or automatically, securing new health coverage is an immediate consideration to avoid gaps in medical protection. Individuals should proactively explore alternative options before their COBRA coverage ends. This planning helps ensure continuity of care and financial security for medical needs.

Several alternatives are available for obtaining new health insurance. Coverage might be accessible through a new employer’s group health plan or by enrolling in a spouse’s employer-sponsored plan. The Health Insurance Marketplace, established by the Affordable Care Act (ACA), offers a range of plans from private insurers. Loss of COBRA coverage due to reaching the maximum term is considered a qualifying life event, triggering a Special Enrollment Period (SEP) on the Marketplace, typically allowing 60 days to enroll in a new plan. However, voluntarily canceling COBRA early or failing to pay premiums generally does not create an SEP, meaning individuals would need to wait for the annual Open Enrollment Period to secure Marketplace coverage.