What is COBRA insurance?

Posted on July 15, 2020 in Dental benefit information

“COBRA” stands for Consolidated Omnibus Budget Reconciliation Act and is a 1985 federal law to provide relief for those who experience a job loss, or other qualifying event, allowing them to continue their existing medical, vision, and dental insurance coverage for a limited period – typically 18 months after the final day of employment. In rarer circumstances, COBRA coverage is available for up to 36 months.1

How do I qualify for COBRA insurance?

Businesses with 20 or more employees are required to offer COBRA coverage for those who qualify. To be eligible for COBRA coverage, you must have been enrolled in your employer's health plan while working, and the health plan must continue to be in effect for active employees.

You can qualify for COBRA if either of the following scenarios apply to you:

  • Your employment has ended, either voluntarily or by your employer (for any reason other than your gross misconduct) resulting in your loss of employee health coverage
  • The number of hours you work per week was reduced to the point that you no longer receive benefits resulting in your loss of employee health coverage2

If you are a spouse or dependent, you may also qualify for COBRA in these scenarios:

  • If coverage is provided by someone who experiences either of the scenarios noted above
  • If you are a spouse who divorces or files for legal separation from the employee whose coverage you receive, you may qualify
  • If you are the spouse of an employee who dies, you may also be eligible

Is dental insurance covered under COBRA?

Yes. Along with medical and vision benefits, dental coverage is included under COBRA. However, you cannot choose new coverage or switch to a different plan from the one you held prior to your change in employment. If, for example, you had a medical and dental plan while employed but not a vision plan, you can keep one or both plans under COBRA – but you would be unable to add a vision plan.

In order to keep using benefits from a standalone dental plan under COBRA, you must complete a separate, dental-specific COBRA enrollment process. Learn more at healthcare.gov or benefits.gov.

What coverage do I receive under COBRA? 

You will receive the same coverage you had while you were employed, extending to your spouse and/or dependents if applicable. It’s important to note, however, that COBRA coverage may be terminated if any fees or premiums are left unpaid. It may also be terminated if you qualify for Medicare or get a job that offers health coverage during the period of COBRA coverage. 

How do I pay for COBRA insurance?

Under COBRA, you pay your entire insurance premium. This amount is often higher than when you were employed, since your employer is no longer sharing the cost. An administrative fee may also apply. In general, expect to pay more for COBRA coverage due to fees and an unshared premium – however, keep in mind that premiums cannot exceed the total cost of your coverage.

In some cases, it may be less costly to enroll in a new, individual insurance policy than pay the premium and fees to keep your prior coverage under COBRA. It’s a good idea to weigh your options and research individual plans and Medicaid before deciding one way or the other. If you are looking for an individual dental insurance policy, visit our dental insurance plans page to learn more about the available options.

Final thoughts

While COBRA insurance could be a good short-term solution for individuals and their dependents when undergoing a change in employment status such as a job loss, Delta Dental of Illinois has an individual plan that is another option for those who are without dental coverage. This plan allows for affordable access to oral health services. Delta Dental of Illinois’ individual plans are based on the Delta Dental PPO network. You will save the most and maximize your benefit dollars by choosing a Delta Dental PPO dentist. Delta Dental PPO dentists agree to the PPO fees, which are significantly less than what a dentist would normally charge as payment in full. The PPO has one of the largest networks in the U.S., and  individuals can easily enroll online.

As for COBRA, check with your employer and insurance provider to better understand your options, responsibilities, and next steps required to elect COBRA insurance and receive dental, vision and medical benefits. You may also visit benefits.gov to check your eligibility for COBRA.

Remember that COBRA coverage requires that you pay 100% of your insurance premium along with administrative fees when applicable. You may be able to save money on medical or dental insurance by enrolling in an individual insurance plan instead. Loss of a job and related health coverage qualifies you for a special enrollment period under the Affordable Care Act, which means you can shop for and purchase a plan even outside of open enrollment timeframes.3

Additional resources

Looking for more information? Brush up on dental insurance basics here.

An Employee’s Guide to Health Benefits Under COBRA. (2016, September). U.S. Department of Labor Employee Benefits Security Administration. Retrieved from dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf

FAQs on COBRA Continuation Health Coverage. (2015, November). U.S. Department of Labor Employee Benefits Security Administration. Retrieved from dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf

Get Marketplace health coverage outside Open Enrollment only with a Special Enrollment Period. (n.d.). HealthCare.gov. Retrieved from healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/