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Exchange Coverage and COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) generally requires employers sponsoring group health plans to offer their employees a temporary extension of coverage under the plan after termination, layoff or other change in employment status.  Since employees generally are obligated to pay the full cost of the premium, plus an administrative fee, they may want to explore options for obtaining coverage through Covered California.

Employees who are newly uninsured after declining the initial offer of COBRA will qualify for special enrollment so long as they apply for and select a plan no more than 60 days after the employer-sponsored coverage ends.  Factors employees may want to consider when deciding between COBRA and Covered California include:

  • Eligibility for premium tax credits and cost-sharing subsidies
  • The total monthly premium for coverage
  • The amounts for co-pays, co-insurance and deductibles

Once an individual declines or drops COBRA and enrolls in a plan through Covered California, the individual cannot go back to COBRA.

If the employee pays the COBRA premium for a limited time only and then stops, the loss of COBRA coverage is not considered a qualifying life event that will trigger special enrollment for Covered California.  Under those circumstances, the employee would have to wait until the next open enrollment period.