When my husband quit his job in Illinois to pursue a new job in Arizona, we were shocked that our coverage in Arizona wouldn’t start until a month after his official start date. Since we moved to Arizona a month before his job started, we were without employer-sponsored health insurance for two months. What I wish I would have known then is that you can apply for COBRA insurance retroactively.
What is COBRA Insurance
When you leave a job or lose a job or lose insurance because of a reduction in hours, you can apply for COBRA insurance. If you were enrolled in employer-sponsored insurance and your employer has 20 or more employees, you’re eligible for COBRA insurance. COBRA will give you the exact same insurance coverage you had with your employer. The difference is that you must pay the entire premium yourself.
When you get employer-sponsored insurance, you typically pay only 20 to 30 percent of the total cost of the premium. Your employer pays the rest. With COBRA, you assume the entire amount, which isn’t cheap. We did opt for COBRA insurance when my husband left his job, so we paid $1,200 a month for coverage for our family of five. What I didn’t know then is that I could have utilized retroactive COBRA insurance.
What Is Retroactive COBRA Insurance?
You can choose not to buy COBRA insurance. In our case, we had COBRA insurance for the two months we were between employer-sponsored insurance, but we never used it. We paid $2,400 total over the two months for insurance we didn’t even need.
Another option is to forego COBRA and go without insurance during this time. If you end up having a medical need, you can still sign up for COBRA because COBRA is retroactive from the time you left your job or lost your insurance. For instance, one woman and her husband opted not to get COBRA when they lost insurance benefits. Within a month, her husband had to have an emergency appendectomy. They were facing tens of thousands of dollars in medical bills. The couple completed the forms for COBRA, and the insurance paid the bills for the appendectomy. They ended up paying just $42 out of pocket for the surgery (plus the cost of COBRA).
An Important Caveat
You only have 60 days to decide whether to enroll in COBRA or not. If you opt out of COBRA coverage and need surgery on day 65, you won’t be covered if you try to retroactively apply.
Also, when you retroactively apply, the insurance benefits begin the day after you lose your benefits with your employer, but you also have to pay from that time, too. So, if you sign up for COBRA on day 58, you also have to retroactively pay for days one through 58 of coverage.
Final Thoughts
COBRA coverage can be an important insurance bridge when you’re between jobs. If you want to initially forego COBRA insurance, you can. If a medical need comes up, you can always apply retroactively. But remember, this only applies for the first 60 days you’re without insurance.
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Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.
I read that the employer has 60 days to send the forms needed to accept or decline the COBRA coverage. If you need to see a doctor during the period between the company policy ending and the acceptance of the COBRA policy, do you just use the health insurance card (plan number/ID) that was issued from the company provided plan?
Thanks, Gregg
Hi Melissa,
Thank you so much for this valuable information!! I had been searching for hours, trying to figure out if Cobra is retroactive–everything I read was very confusing. Your blog answered everything in a language that I can understand!
Thank you!!