Key Takeaways
- COBRA allows you to continue your employer-sponsored health insurance for up to 18 months after leaving a job, maintaining your existing addiction treatment coverage.
- COBRA coverage is identical to your active employee coverage but you pay the full premium plus a 2 percent administrative fee, which can cost $600 to $2,000 or more per month.
- You have 60 days from the date of your qualifying event to elect COBRA coverage, and coverage is retroactive to the date of your qualifying event.
- California Cal-COBRA extends continuation coverage for up to 36 months and applies to employers with 2 to 19 employees not covered by federal COBRA.
- Covered California marketplace plans and Medi-Cal may provide more affordable alternatives to COBRA for addiction treatment coverage.
What Is COBRA and How Does It Help with Rehab?
The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, is a federal law that allows employees and their dependents to continue their group health insurance coverage for a limited time after a qualifying event such as job loss, reduction in work hours, or other life events. For individuals needing addiction treatment, COBRA provides a critical bridge that maintains insurance coverage during a vulnerable period.
Job loss and addiction are frequently interconnected. Substance abuse can lead to termination, and the stress and loss of identity associated with losing a job can trigger or accelerate substance use. COBRA ensures that the loss of employer-sponsored insurance does not add a lack of treatment access to an already difficult situation.
COBRA continuation coverage preserves the same benefits you had as an active employee, including substance abuse treatment benefits. If your employer plan covered residential rehab, detox, and outpatient treatment while you were employed, COBRA maintains that same coverage. This continuity is valuable because it avoids disruptions in treatment or changes in provider networks during a critical period.
COBRA Eligibility and Enrollment
COBRA applies to group health plans maintained by employers with 20 or more employees. Qualifying events that trigger COBRA eligibility include voluntary or involuntary termination of employment, other than for gross misconduct, and reduction in work hours that results in loss of coverage. Divorce, death of the covered employee, and other events also qualify family members for COBRA.
After a qualifying event, your employer must notify the plan administrator within 30 days, and the administrator must send you a COBRA election notice within 14 days after that. You then have 60 days from the later of the qualifying event or the date of the election notice to elect COBRA coverage. Coverage is retroactive to the date of the qualifying event, meaning there is no gap in coverage even if you elect COBRA near the end of the 60-day window.
The 60-day COBRA election deadline is strict. If you need addiction treatment and are within your COBRA election window, elect coverage immediately to preserve your right to insurance-covered treatment. You can begin treatment and elect COBRA retroactively within the 60-day period.
Important Deadlines
The 60-day election period is critical because missing this deadline means losing your right to COBRA coverage permanently. If you are in a crisis and need addiction treatment, you can begin treatment within the 60-day window and elect COBRA retroactively to ensure coverage for your treatment dates.
After electing COBRA, you have 45 days to make your initial premium payment. This first payment covers all premiums due from the date of the qualifying event. Subsequent payments are due monthly, with a 30-day grace period. Missing a premium payment can result in permanent loss of COBRA coverage with no reinstatement option.
The Cost of COBRA Coverage
COBRA's primary drawback is cost. While you were employed, your employer likely paid a significant portion of your health insurance premiums. Under COBRA, you are responsible for the full premium, which includes both the employer and employee share, plus a 2 percent administrative fee. This means COBRA premiums are often dramatically higher than what you were paying as an employee.
For an individual, COBRA premiums typically range from $600 to $800 per month, while family coverage can cost $1,500 to $2,200 or more per month. These costs can be prohibitive for someone who has recently lost their income. However, if you are in the midst of active addiction treatment, maintaining COBRA coverage may be less expensive than paying for treatment entirely out of pocket.
When evaluating the cost of COBRA, consider your specific treatment needs and the cost-sharing structure of your plan. If your plan has strong addiction treatment benefits with a reasonable out-of-pocket maximum, COBRA may be worth the premium cost because it limits your total financial exposure for treatment. Trust SoCal can help you compare COBRA costs against alternative coverage options to find the most affordable path to treatment. Call (949) 280-8360.
California Cal-COBRA: Extended Protection
California extends continuation coverage through Cal-COBRA, which provides additional protections beyond federal COBRA. Cal-COBRA applies to employers with 2 to 19 employees who are not covered by federal COBRA, ensuring that employees of smaller businesses have access to continuation coverage.
Cal-COBRA provides up to 36 months of continuation coverage, compared to 18 months under federal COBRA. For individuals who exhaust their federal COBRA coverage, Cal-COBRA may extend coverage for an additional 18 months, bringing the total to 36 months. This extension is available for group plans regulated by the California Department of Managed Health Care or the California Department of Insurance.
The enrollment and premium requirements for Cal-COBRA are similar to federal COBRA. You must elect coverage within the specified timeframe and pay the full premium plus an administrative fee of up to 10 percent. While the cost remains high, Cal-COBRA's extended duration provides a longer safety net for individuals who need sustained access to addiction treatment benefits.
Alternatives to COBRA for Rehab Coverage
Depending on your financial situation and treatment needs, alternatives to COBRA may provide more affordable coverage for addiction treatment. Evaluating all available options ensures you choose the coverage that best supports your recovery at a cost you can sustain.
Covered California Marketplace Plans
Losing employer-sponsored coverage triggers a special enrollment period that allows you to purchase a plan through Covered California within 60 days of your qualifying event. Marketplace plans cover substance abuse treatment as an essential health benefit, and you may qualify for premium tax credits and cost-sharing reductions based on your income.
For many recently unemployed individuals, a subsidized Covered California plan is significantly less expensive than COBRA while still providing comprehensive addiction treatment coverage. If your income has dropped substantially due to job loss, you may qualify for generous subsidies that reduce your monthly premium to a fraction of the COBRA cost.
Medi-Cal
If your income is at or below 138 percent of the federal poverty level, you likely qualify for Medi-Cal, California's Medicaid program. Medi-Cal provides comprehensive substance abuse treatment coverage with minimal or no cost-sharing, making it the most affordable option for eligible individuals.
Medi-Cal enrollment is available year-round, and you can apply online through CoveredCA.com, by phone, or in person at your county social services office. Coverage can begin as soon as your application is approved, providing rapid access to addiction treatment during a critical period.
Making the Right Coverage Decision
Choosing between COBRA, Covered California, and Medi-Cal depends on your specific circumstances, including your income level, treatment needs, and the quality of your former employer's plan. Each option has advantages and trade-offs that should be evaluated carefully.
If your employer plan had excellent addiction treatment benefits and a low out-of-pocket maximum, COBRA may be worth the premium cost because it maximizes your treatment coverage. If cost is the primary concern and you qualify for subsidies, a Covered California plan may provide adequate coverage at a lower premium. If you qualify for Medi-Cal, the free comprehensive coverage is usually the best option.
Trust SoCal's admissions team can help you evaluate your coverage options and determine which path provides the best combination of treatment access and affordability. We verify benefits for COBRA, marketplace, and Medi-Cal plans and can provide a clear comparison of your options. Call (949) 280-8360 for a confidential consultation.
Courtney Rolle, CMHC
Clinical Mental Health Counselor
