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What Happens When COBRA Ends?

By Jacques Chambers, Benefits Counselor

Last month’s column described how someone could stay on their employer’s health insurance even after they stop working there. But COBRA only lasts 18 months for terminating employees. What happens after that?

There are two federal laws that can be used to continue health insurance once your COBRA Continuation Coverage ends. Both provide access to health insurance without having to prove that you are “insurable.”

1. If you leave work due to disability……

COBRA was amended to allow people, who had to stop work due to disability, to extend the time they can keep COBRA Continuation. Under this law, someone who qualifies may stay on their employer’s COBRA Continuation until they become eligible for Medicare, which is normally 29 months after they leave work due to disability.

However, to qualify for this extension of COBRA, you must meet several requirements:

1. You must apply for Social Security Disability Insurance (SSDI) benefits.

2. Social Security must approve your benefits during your initial 18 month COBRA period.

3. The Onset Date of your disability, must be within 60 days of the start of your COBRA coverage.

4. Finally, you must provide a copy of your Social Security Notice of Award letter to your COBRA administrator within 60 days of receiving it AND within 18 month COBRA period.

Now, for a practical look at each of these requirements:

1. COBRA is letting Social Security decide who was disabled when they stopped working with this requirement. If you didn’t pay into Social Security because you were a public school teacher or government employee and are therefore not “financially eligible”, Social Security is still required to review your medical records to see if you are disabled enough to qualify for benefits if you were eligible. You need to tell them you are applying to extend COBRA when you first apply.

2. The SSDI claim must be approved during the original 18 months of COBRA. If there is a denial and you have to wait to appeal before an Administrative Law Judge, and it goes beyond 18 months, you lose your chance to extend COBRA even if your claim is later approved.

3. Social Security will determine the onset date of your disability. That is the date they believe you became disabled and the date from which they start counting the five-month waiting period of benefits. Even if the approval letter comes in the last few months of your COBRA Continuation, you can still qualify for the extension if the Onset Date given in your approval letter is within 60 days of the COBRA Qualifying Event.

4. This rule has unfortunately cost many people their right to stay on COBRA. The COBRA administrator is usually your old employer but they may have contracted with an outside firm to administer their COBRA people. A good rule of thumb is that the copy of the Social Security Notice of Award letter should go to the same place that you pay your COBRA premiums to. Ask for a receipt or otherwise confirm that the letter was received.

This is a good way to stayed insured since it allows you to stay on your employer’s health insurance plan until you become eligible for Medicare. The primary drawback is that during the months after the first 18 months of COBRA, the employer can (and will) charge you the actual premium PLUS 50%. For example, if you were paying $200 per month on COBRA, the extended months will cost $300 per month.

2. If your COBRA ends and you don’t qualify for the disability extension….

A 1996 federal law, called HIPAA, provides that people losing their employer’s coverage after COBRA expires, have a one-time opportunity to move to a broad benefit individual health insurance plan.

The rules on qualifying for individual coverage are not complicated:

1. You must continue your COBRA Continuation as long as possible. You cannot drop COBRA at any time and move to the individual plan.

2. You must have been continuously covered under health insurance for at least 18 months. That’s easy, since COBRA itself lasts 18 months or longer.

3. You must sign up for the individual coverage within 63 days of the end of your COBRA insurance.

The Coverage.

The plans you will have a guaranteed right to buy will change from state to state. Some states require that everyone purchase coverage from one central plan. Other states require every insurance company writing individual health insurance to carry “HIPAA coverage plans” and each person can go with the company of their choice. Either way, the coverage must be broad, and will almost always include prescription drug coverage. Companies offering “HIPAA” plans must offer their two most popular health plans based on premiums written.

The Cost

The insurance lobby wasn’t totally asleep when this law was passed, so there are no limits on what carriers can charge. It will definitely cost you more than buying coverage on the open market. The cost will also vary dramatically by location.

How It Works

Once your COBRA Continuation coverage ends, the insurance company or administrator is required to send you what is called a “Certificate of Creditable Coverage” which is usually simply a letter confirming the starting and stopping dates of your coverage with them.

Upon presenting that letter to the HIPAA plan or carrier, the plan is required to let you purchase the coverage.

Thanks to these two laws, now, if you ever become insured under an employer health plan, you will be permitted to maintain health insurance indefinitely, even after your employment terminates.

Jacques Chambers is a benefits counselor in private practice. He has over thirty years in benefits and advocacy. You may contact him through his web site at

April 2002

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