Navigating health insurance options after leaving a job or experiencing a change in employment can be challenging. One term you’ve likely heard is “COBRA,” which allows individuals to continue their employer-sponsored health insurance coverage for a limited time. However, not all COBRA coverage is the same. Understanding the difference between Federal COBRA and Small Group COBRA is essential for making an informed decision.
What is Federal COBRA?
Federal COBRA, established under the Consolidated Omnibus Budget Reconciliation Act, applies to employers with 20 or more employees. It provides employees and their dependents the option to maintain their health coverage after a qualifying event, such as:
- Job loss (voluntary or involuntary, excluding gross misconduct)
- Reduction in work hours
- Divorce or legal separation
- Death of the covered employee
Federal COBRA coverage typically lasts for up to 18 months, though extensions may be available under specific circumstances, such as disability.
Key features of Federal COBRA include:
- Same coverage: You maintain the same benefits as active employees.
- Full cost: You pay the full premium, including the portion previously covered by your employer, plus a 2% administrative fee.
What is Small Group COBRA?
Small Group COBRA is often referred to as “state continuation coverage” and is designed for employers with fewer than 20 employees. While the rules vary by state, Small Group COBRA provides a similar opportunity to extend health insurance coverage after a qualifying event.
For example, California’s Small Group COBRA law (often called Cal-COBRA) extends the same type of continuation coverage to employees of small businesses. Coverage duration under Small Group COBRA may differ from Federal COBRA—some states offer fewer than 18 months, while others align closely with federal regulations.
Key differences to consider include:
- State-specific rules: Coverage terms and eligibility requirements depend on the laws in each state.
Premium costs: Like Federal COBRA, you’re responsible for the full premium and any administrative fees. - Before making a decision about COBRA coverage, speak to an experienced benefits expert in California to learn our state-specific rules for coverage.
Choosing the Right Option
Whether you’re eligible for Federal COBRA or Small Group COBRA, understanding the terms and costs is crucial. Both options ensure continuity of coverage, but the best choice depends on your circumstances and long-term health needs.
Need Help Deciding?
Health insurance decisions can feel overwhelming, but you don’t have to navigate them alone. Contact the group benefits specialists at Bay Area Health Insurance for expert guidance on COBRA options and other health insurance solutions. Let us help you make the right choice for your needs and budget!