Can You Cancel COBRA at Any Time?
Understand how your COBRA health coverage can end, whether by your choice or automatically, and what steps to take next.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows individuals and their families to temporarily continue their health coverage under an employer’s group health plan. This option becomes available after certain life events, such as job loss, reduced work hours, or other specific situations that would otherwise lead to a loss of health benefits. The law generally applies to private-sector employers and state or local governments that had 20 or more employees in the prior calendar year. Understanding how and when COBRA coverage ends is important for managing health insurance needs effectively.
Voluntarily Ending COBRA Coverage
Individuals enrolled in COBRA coverage can choose to cancel it at any time. This voluntary termination is a personal decision, often made when alternative health coverage becomes available or if the cost of COBRA becomes prohibitive. To cancel, the qualified beneficiary must notify the plan administrator, often in writing.
The effective date of a voluntary COBRA cancellation is the end of the current premium period for which payment has been made. For instance, if coverage is paid through November, it ends December 1. Once COBRA coverage is voluntarily canceled, re-enrollment is not possible, except within a limited grace period for payment. Careful consideration is needed before making this decision, particularly if future health coverage is not yet secured.
Automatic Termination of COBRA Coverage
COBRA coverage can also end automatically under several specific circumstances, independent of an individual’s choice. One common reason is reaching the maximum coverage period allowed by law. For events like job termination or reduced work hours, COBRA coverage lasts for 18 months. However, this period can extend to 29 months if a qualified beneficiary is determined to be disabled by the Social Security Administration within the first 60 days of COBRA coverage. Certain other qualifying events, such as the death of the covered employee, divorce, or a child ceasing to be a dependent, can allow for a maximum coverage period of 36 months for spouses and dependent children.
Another frequent cause for automatic termination is the failure to pay premiums on time. COBRA premiums are due monthly. A 30-day grace period usually applies for ongoing payments, but missing this deadline can result in retroactive termination to the last day for which premiums were paid. The initial premium payment has a longer grace period, 45 days from the date of election. If the former employer ceases to provide any group health plan to any of its employees, COBRA coverage will also terminate for all beneficiaries.
COBRA coverage also ends if a qualified beneficiary becomes covered under another group health plan that does not impose pre-existing condition exclusions related to their medical conditions. Similarly, if a qualified beneficiary becomes entitled to Medicare benefits after electing COBRA, their COBRA coverage can be terminated early for that individual. This rule applies even if other family members on the same COBRA plan are not yet Medicare-entitled; their coverage may continue.
What Happens After COBRA Ends
When COBRA coverage concludes, whether voluntarily or automatically, the immediate implication is the loss of health insurance benefits. Since re-enrollment in COBRA is not possible after termination, individuals must seek alternative coverage options to avoid a gap in protection. Prompt action is advisable to ensure continuous access to healthcare services.
A primary avenue for new health insurance is the Health Insurance Marketplace, established under the Affordable Care Act (ACA). The loss of COBRA coverage, or other qualifying health coverage, triggers a Special Enrollment Period (SEP). This allows individuals to enroll in a new plan outside the annual Open Enrollment Period. This SEP provides a 60-day window before or after the loss of coverage to select a new plan.
Coverage through a new employer-sponsored health plan is another common option if an individual gains new employment. Depending on income and other factors, individuals may also qualify for government-sponsored programs such as Medicaid or the Children’s Health Insurance Program (CHIP).