How to Stop COBRA Coverage & When It Ends Automatically

COBRA provides a temporary extension of group health coverage that might otherwise be lost due to certain life events. This federal law allows individuals to continue their health benefits for a limited period after events such as job loss, reduction in work hours, or other specific circumstances. COBRA generally applies to group health plans sponsored by employers with 20 or more employees. It offers a bridge for health insurance needs, maintaining the same coverage an individual had as an active employee.

Voluntarily Ending COBRA Coverage

Individuals can discontinue their COBRA coverage at any time. The process involves notifying the COBRA plan administrator, which could be the former employer or a third-party administrator handling COBRA benefits. Formal communication is important to ensure the termination is processed correctly.

Notification methods include submitting a written request or a specific termination form provided by the administrator. Some plans may also offer online portals for managing coverage changes. Keep a record of the notification, such as a copy of the letter or confirmation of submission, along with the date. The effective date of voluntary termination is the date the notification is received or a future date specified by the individual. Simply ceasing premium payments will also lead to termination of coverage, but a formal notification helps avoid any misunderstandings regarding the coverage end date.

Events That Automatically End COBRA

COBRA coverage can terminate automatically under specific circumstances, without any action required from the individual. One reason is reaching the maximum coverage period, which is 18 months for events like employment termination or reduction in hours. Dependents may be eligible for up to 36 months of coverage following events like the death of the covered employee, divorce, or the employee becoming entitled to Medicare. An extension to 29 months may be available if a qualified beneficiary is determined to be disabled by the Social Security Administration within the first 60 days of COBRA coverage, provided the plan administrator is notified within 60 days of that determination and before the initial 18-month period ends.

Another automatic termination event is the failure to pay required premiums on time. After the initial premium payment, which has a 45-day deadline, subsequent monthly premiums have a grace period of at least 30 days. If a premium is not paid in full by the end of its grace period, coverage can be retroactively canceled to the last date for which payment was received. Plans must provide an election notice detailing payment due dates and consequences of non-payment.

COBRA coverage also ends if a qualified beneficiary becomes covered under another group health plan after electing COBRA, including coverage through a new employer’s plan or a spouse’s plan. If the individual becomes entitled to Medicare benefits and enrolls in Medicare while on COBRA, the COBRA coverage will cease or become secondary. COBRA will also terminate if the former employer ceases to maintain any group health plan for its employees.

Understanding Your Coverage Status After Termination

Once COBRA coverage ends, whether voluntarily or due to an automatic termination event, the individual no longer has health insurance through that specific plan. This means the plan will not cover any medical expenses incurred after the designated termination date. For instance, if coverage ends due to non-payment, any claims for services received during the grace period might be denied if the payment is not ultimately made.

Losing COBRA coverage, especially due to non-payment or voluntary cancellation, does not typically grant eligibility for a special enrollment period to obtain new coverage through the Health Insurance Marketplace. Plan for alternative health insurance arrangements before COBRA coverage concludes to avoid gaps in coverage.