COBRA Continuation Health Coverage

COBRA Continuation Health Coverage2021-07-01T14:28:28-04:00

What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), is a federal law that requires employers offering health care benefits to offer the option of continuing such coverage to qualified beneficiaries – at their own expense – who would otherwise lose their benefits due to employment termination, reduction in hours, or certain other events.

COBRA legislation allows employees and their dependents who were covered under an employer’s group health plan to continue their health coverage in situations when it would ordinarily be lost, such as a layoff or reduction in the number of hours worked.

COBRA legislation applies to all employers’ group health plans, with the exception of small employers with less than 20 employees.

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COBRA Account Holders:

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For Employers:

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COBRA Frequently Asked Questions

Qualifying events for COBRA coverage include:

  • An employee’s voluntary or involuntary termination of employment, unless it is for gross misconduct. While COBRA does not define misconduct, criteria to use if an employer is contemplating denying COBRA benefits due to misconduct are:
    • There must be a connection between the offense and the employee’s job.
    • The employee must be able to understand the gravity of the misconduct.
    • The offense must be willful.
  • An employee’s reduction in employment hours (for example, from full time to part time)
  • A covered spouse’s divorce or legal separation from an employee
  • An employee’s death
  • An employee’s entitlement to Medicare
  • A covered dependent’s change in status (for example, reaching an age that no longer qualifies the dependent for coverage under the parent’s health plan)
  • Active military duty when health coverage is not voluntarily maintained
  • Failure to return to work at the end of family and medical leave where coverage was in effect at the beginning of the leave but was lost during the leave
  • An employer’s bankruptcy
After an employee receives notification from an employer, the employee has 60 days to notify the employer that he or she wants coverage. The employee generally pays the full cost of COBRA insurance premiums. (The law allows the employer to charge 102 percent of the premium, keeping two percent to cover administrative costs. If an employee receives extended COBRA coverage due to disability, the employer can charge 150 percent of the premium for months 18 through 29.)

When an individual chooses to take COBRA coverage, he or she has 45 days to make the first payment. (The employee generally pays the full cost of COBRA insurance premiums.) Federal law states that COBRA coverage can be terminated if premium payments are late. Payment is considered timely if it is made within 30 days after the due date or within a longer period set out under the plan.

A qualified beneficiary is anyone covered under an employer’s group health plan on the day before an event that causes loss of coverage, including:

  • Full- and part-time employees
  • Their spouses and dependents
  • Retirees (unless eligible for Medicare)
  • Partners in a partnership

COBRA is effective one day after your benefits termination date, pending the receipt of a timely election and payment. You must elect COBRA coverage within 60 days from the date of your letter or the Benefits Termination Date whichever is later, and make your first payment within 45 days from the election postmark before coverage will be active.

The length of your COBRA continuation coverage (18, 29, or 36 months) will depend on the Qualifying Event reason.
You will be offered the same coverage you had the day before you lost your benefits.

You can elect COBRA online via COBRApoint. If you prefer to elect COBRA coverage via mail, fax, or email, please contact us at [email protected] or 855-687-2021 to request the necessary form.

Full premium payments must be post marked by the U.S. Postal Service on or before the latest post mark date and received by Optum Financial. Premium payments may also be paid online through COBRApoint by 11:59pm Central standard time on the latest post mark date to be accepted. Please note, payments made online before 11:59pm CST will be processed the same day any payments made online after 11:59pm CST will not be processed until the next business day.

Once Optum Financial receives and processes your election a Premium Notice will be mailed to you. The Premium Notice will provide you with premium and amount due. Please note if you do not receive a Premium Notice please contact Optum Financial, as it is your responsibility to make a full and timely payment even if you do not receive a Premium Notice. A copy of the Premium Notice is also available under the Communications tab within your account via the website.

You may be required to pay for service out of pocket during your re enrollment period. If so, you may contact your health plan for possible reimbursement procedures once your coverage is reinstated.

Once Optum Financial receives and processes your election and full payment, Optum Financial will then forward your information to your health plan and/or insurer will update your eligibility which may take 7-10 days from receipt of the payment and election.

You will continue the same group benefits and should be able to use the same insurance cards you had prior to COBRA. You may need new cards if you are a dependent losing coverage. Optum Financial does not issue insurance cards.

If you are on Medicare prior to electing to continue COBRA coverage, then you may continue COBRA and Medicare.
  • Employers must notify covered employees and covered spouses of their initial rights under COBRA when they first join the plan.
  • Employers must notify covered persons of their election rights to continue coverage after a qualifying event takes place.
  • Employers have 30 days to notify the plan administrator (typically the insurance company) when a qualifying event occurs.
    • In the event of divorce or change of status by a dependent, employers have 60 days. Once notified, the administrator has 14 days to notify the individual entitled to COBRA coverage.

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