Can You Cancel COBRA Coverage at Any Time?
Gain clarity on canceling COBRA coverage, recognizing automatic termination events, and navigating your health insurance options post-cancellation.
COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage can be canceled at any time. This federal law offers a temporary extension of group health coverage that might otherwise end due to certain life events, such as job loss or reduced work hours. While COBRA provides continuity, it is often more expensive than active employee premiums. Individuals typically pay the full cost, including the employer’s portion, plus an administrative fee, up to 102% of the total premium. This high cost often prompts individuals to seek alternative, more affordable health insurance.
How to Cancel COBRA Coverage
Voluntarily canceling COBRA coverage requires direct action. The process typically begins by contacting the COBRA administrator, often the former employer’s human resources department or a third-party benefits administrator.
Most administrators require a written notice to terminate coverage, which can be sent via mail, email, or sometimes through an online portal. Providing written notice creates a clear record of the cancellation request. The request should include the individual’s full name, COBRA ID or policy number, and the precise date they wish for coverage to end.
Upon receiving the cancellation request, ask for written confirmation of the termination from the administrator. This confirmation serves as proof that coverage has been discontinued. Typically, cancellation becomes effective at the end of the current premium payment period, though an earlier termination date might be possible if specifically requested and agreed upon.
Automatic Termination of COBRA Coverage
COBRA coverage can also end automatically under specific circumstances. The coverage has a maximum duration, generally 18 months for termination of employment or reduction in hours, or up to 36 months for other qualifying events like divorce, death of the covered employee, or a child losing dependent status. Individuals with certain disabilities may be eligible for an extension, potentially up to 29 months.
One common reason for automatic termination is the failure to pay premiums on time. While there is generally a grace period, often around 30 days, for monthly premium payments, missing this deadline can lead to the termination of coverage. If the premium is not paid within the grace period, coverage can be canceled retroactively to the beginning of the period for which the payment was due.
COBRA coverage also automatically terminates if the employer sponsoring the plan discontinues offering any group health plan to its active employees. If a qualified beneficiary becomes covered under another group health plan after electing COBRA, their COBRA coverage can end, provided the new plan does not have limitations or exclusions for pre-existing conditions that apply to the beneficiary. Coverage can also cease if a qualified beneficiary becomes entitled to Medicare benefits after electing COBRA. When COBRA coverage terminates for any of these reasons, the plan administrator must provide a notice of termination, explaining the reason and effective date.
What Happens After Canceling COBRA
Upon canceling COBRA coverage, an individual will no longer have health insurance benefits under that plan. Being uninsured can lead to substantial out-of-pocket costs for healthcare services.
Canceling COBRA coverage is a “qualifying life event” (QLE) that allows individuals to enroll in a new health plan outside the standard annual open enrollment period. This QLE triggers a Special Enrollment Period (SEP) on the Health Insurance Marketplace, accessible through healthcare.gov or state-specific exchanges. The SEP typically provides a 60-day window from the date COBRA coverage ends to select and enroll in a new plan.
Other avenues for new health coverage include enrolling in a spouse’s employer-sponsored health plan, if it offers a special enrollment period. Depending on income and household size, individuals might also qualify for Medicaid, a government-funded health assistance program. Acting quickly within the available special enrollment period helps prevent gaps in health insurance coverage.