COBRA and bridge coverage — insurance during transitions
This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.
Your parent just retired, or their employer made cuts, and suddenly there's a gap. They had health insurance through their job, and now they don't. They won't be eligible for Medicare for another few years, or they're waiting for something to transition. There's this awful space between losing one form of coverage and gaining another, and they're vulnerable in that gap.
This is where COBRA and bridge coverage options come in. These aren't glamorous topics, and insurance transitions aren't anyone's idea of a fun conversation. But understanding what your parent's options are during this in-between time is exactly how you prevent a medical emergency from becoming a financial catastrophe.
The anxiety people feel during these transitions is real. You stop having the safety net you've had for years, and you're not yet on the next one. You might have prescriptions that run out. Your parent might have a doctor's appointment scheduled. What happens if they get sick during this gap? If you don't understand what options exist and what they cost, that uncertainty alone can create stress.
The good news is that there are usually options. They might not be cheap, and they probably aren't ideal, but your parent doesn't have to be uninsured. And knowing what those options are gives your family the ability to make an informed decision rather than scrambling when something goes wrong.
Understanding the Basics
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It's a federal law that requires employers with fifty or more employees to offer their former employees the chance to keep their existing health insurance for a limited time after their employment ends. This isn't new coverage. It's the same group health insurance your parent had while working. The difference is that now your parent pays the full cost of the premium (instead of the employer paying part of it) plus a small administrative fee.
The key point about COBRA is that it's temporary. Most COBRA coverage lasts eighteen months after employment ends. There are some situations where it lasts longer—for example, if your parent's spouse would be covered by COBRA, and your parent dies during the eighteen-month period, the spouse might have the right to continue for an additional thirty-six months. But as a general rule, COBRA buys you a year and a half.
Another important thing to understand: COBRA is only available from employers with fifty or more employees. If your parent worked for a small company, COBRA might not be an option. In that case, other options become more relevant.
So what does COBRA actually mean for your parent's finances? Because the employer was paying part of the premium before, COBRA premiums are higher than what your parent was paying while working. Typically, the full premium your parent now pays will be 102 percent of what the group plan costs (the 2 percent extra covers administrative fees). If the employer was paying 60 percent of a one thousand dollar premium, your parent was paying four hundred dollars a month. Under COBRA, they'd pay the full one thousand dollars plus twenty dollars in fees. That's a real cost jump.
Bridge coverage is a broader term for any health insurance that covers you during a gap between two other plans. It might be COBRA, it might be temporary health insurance from a private company, it might be a short-term health insurance plan, it might be coverage from an interim job, or it might be coverage through a spouse's plan. The principle is the same: it's meant to cover you for a period between one main health insurance plan and another.
Understanding what your parent qualifies for matters because different options have very different costs and coverage levels. A high-deductible short-term plan might cost two hundred dollars a month but only cover catastrophic situations. COBRA might cost one thousand dollars a month but cover exactly what your parent was used to. A spouse's plan might cost nothing if they're retired and covered through their spouse's benefits, but it might have different providers and coverage rules. These options serve different purposes.
The timing of transitions also matters. If your parent is turning sixty-five, Medicare eligibility happens on the first of the month in which they turn sixty-five. If they're stopping work, they need to know exactly when their employer coverage ends. Is it the day they stop working? The end of the month? They might also need to know if they're eligible for any employer-sponsored retiree health coverage, which is separate from COBRA and sometimes much better.
Your Parent's Specific Situation
First, establish the timeline. When does your parent's employer coverage end? Your parent should receive something called a Summary Plan Description or a notice about their rights under COBRA from their employer when they leave the job. If they haven't received this yet, they should contact their former employer's human resources department and ask for it. This notice explains COBRA rights, the time limits for making COBRA elections, and the cost.
If your parent is turning sixty-five, when exactly? Medicare eligibility depends on the specific birth date. Your parent can check their Social Security account or contact Social Security directly to confirm the month they become eligible. Knowing this tells you how long a bridge is needed. If your parent stops working in July and becomes eligible for Medicare in September, a two-month gap is very different from someone needing an eighteen-month solution.
Ask whether your parent's employer offers any retiree health coverage. Some employers, especially larger ones or those with strong unions, offer health insurance to retirees before they reach Medicare age. This coverage is usually much better than COBRA because the employer continues to subsidize it. If this benefit exists, it would typically start immediately when your parent retires, with no gap.
Find out if your parent has a spouse and whether that spouse has health insurance. This matters because a spouse's employer plan often allows the retired employee to enroll immediately or during the COBRA election period. If a spouse's plan is available, the costs and coverage might be completely different from buying bridge coverage alone.
Gather the information you'll need. This includes your parent's last employer's name and contact information (specifically the human resources department), details about when their employment ends, their full name and Social Security number (needed for COBRA paperwork), and information about any dependents who would need to be covered. If your parent has dependents besides a spouse who needs coverage, the COBRA cost increases because family coverage costs more than individual coverage.
Get a copy of their current health insurance Summary of Benefits and Coverage document. This explains what their current plan covers, what they pay out of pocket, and what's covered and what isn't. When comparing options, you want to know if the coverage is changing. A bridge plan that covers hospitalizations but not outpatient care is very different from what your parent might be used to.
Taking Next Steps
If COBRA is available and your parent is interested in it, they have a strict timeline. Usually, they have sixty days from losing their coverage to elect COBRA. If they miss this deadline, they generally can't go back and enroll. This isn't something to put off. Your parent should contact their former employer's human resources department, ask for the COBRA election form, and understand the monthly cost before deciding whether to take it.
When evaluating whether COBRA makes sense, the math is important. If COBRA costs one thousand dollars a month and your parent only needs it for two months, that's a manageable two thousand dollar cost. If COBRA costs one thousand dollars a month and they need it for twelve months because they're not yet eligible for Medicare, that's a harder expense to justify if other options exist.
Other options to consider include short-term health insurance. These are temporary plans sold by private insurance companies (not the same as travel insurance or accident-only insurance). They typically cost less than COBRA but have higher deductibles, narrower provider networks, and specific exclusions. Short-term plans are useful as a cheap bridge for a short period, especially for someone who expects to be covered by Medicare soon. They're not appropriate if your parent has significant health needs that require ongoing care.
Your parent might also look into marketplace insurance through the ACA (Affordable Care Act) exchanges. These are available to people without employer coverage and might actually be cheaper than COBRA, especially if your parent's income is low enough to qualify for subsidies. Marketplace coverage begins on the first day of the month you're covered under the plan, so there can be gaps between when your parent loses employer coverage and when marketplace coverage begins if they don't plan ahead.
If your parent has a spouse with employer insurance, spousal enrollment might be possible. Some plans allow someone to enroll in a spouse's plan outside of the normal open enrollment period if they lose other coverage. The cost depends on whether it's individual, two-person, or family coverage. This should be explored quickly because the timing might be limited.
One practical situation to watch for: your parent might have already reached sixty-five or might reach sixty-five soon. Medicare coverage starts automatically for people who are receiving Social Security benefits, and most people over sixty-five are receiving benefits. If your parent is already sixty-five and lost employer coverage, they should be automatically enrolled in Medicare Parts A and B. In this situation, COBRA usually isn't necessary, though they still need to understand what's covered under Medicare and what gaps exist (which is a separate topic). If your parent is under sixty-five, they have a different problem and need a bridge.
If your parent is on any maintenance medications (meaning they take them regularly and need to keep taking them), find out if the bridge plan covers them and at what cost. Some bridge options have formularies (lists of covered drugs) that don't include all medications. If a critical medication isn't covered, the bridge plan might not work, regardless of the cost. Your parent should call the plan and check before enrolling.
Get the information about deductibles and out-of-pocket maximums in the bridge plan. These are very different from the employer plan your parent was used to. If the new deductible is much higher, that needs to be understood. If your parent goes to the doctor multiple times or has a hospitalization during the bridge period, the costs could be significant.
Another practical reality: if your parent is older and a COBRA notice has been sitting on their desk for a month because they're overwhelmed, they need to act now. The sixty-day election window is firm. Once it closes, COBRA coverage is no longer available, and options become much more limited. If your parent is overwhelmed or confused, this is the moment for adult children to step in, call the employer's human resources department, get the paperwork, and help process it.
The decision about what bridge coverage to choose depends on how long the gap is, how much your parent can afford to pay, and what health needs they have during that period. Someone with a two-month gap before Medicare eligibility might choose cheap short-term coverage to save money. Someone with a twelve-month gap with ongoing medical care might choose COBRA despite the cost because it ensures continuity with their current providers and plan rules.
One last point that gets overlooked: inform the new health insurance (Medicare or a new employer plan) about your parent's previous coverage. Most insurance companies want to know about other coverage, and timing matters for coordination of benefits. Make sure there's no gap between when one plan ends and another begins. If there is a gap, document it. Sometimes gaps cause billing confusion later, and having clear documentation of the dates helps resolve it.
The bridge between one form of coverage and another is temporary, but getting it right matters enormously. Your parent shouldn't be making medical decisions during this time based on fear of cost or uncertainty about what's covered. Taking an hour or two now to understand the options and make a plan prevents a lot of anxiety and potential financial damage.
How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.