COBRA Insurance Coverage for Drug & Alcohol Rehab

Can Cobra Insurance Cover Drug or Alcohol Rehab?

If you or a loved one is struggling with addiction, you may be researching how to enroll in a drug or alcohol rehab program. As with any other healthcare service, alcohol and drug rehab can be expensive. But, if you have a health insurance plan, you may be able to use that coverage to help pay for some or all of the costs associated with rehab.

COBRA insurance plans, which are designed to give employees and dependents who lose their group health benefits the right to continue group health plan coverage for a limited period, may help cover some or all of the costs associated with rehab.^{1 para 1}

Because COBRA is an extension of your previous employer’s health plan, coverage will vary from plan to plan, as every employer-sponsored plan is different. As such, you should work with your plan administrator or call the number on the back of your plan card to speak to a plan representative who can help you learn more about your benefits and coverage for rehab under COBRA.

How to Verify Cobra Insurance for Rehab

It’s always best to be sure about what your healthcare benefits entail. You don’t want to be caught by surprise with unexpected financial costs. You may wonder if COBRA covers addiction rehab treatment, and the only way to really have the answer is to check your COBRA health plan coverage.

Knowing exactly what your COBRA plan covers can give you peace of mind while you or your loved one is in drug and alcohol rehab. You can do the work of getting and staying sober without worrying about unexpected costs or financial struggles. You can check your COBRA coverage by calling .

What is Cobra Insurance?

COBRA Insurance is a colloquial term used to refer to the health benefit provisions under the Consolidated Omnibus Budget Reconciliation Act, which effectively amended the Internal Revenue Code, Public Health Service Act, and the Employee Retirement Income Security Act (ERISA) to allow group health coverage to continue temporarily in situations where it might otherwise be terminated.^{2, Q1}

What this means is that if you work for a private-sector employer and you voluntarily or involuntarily leave your job or experience another qualifying event, you can elect to continue coverage under your previous plan.^{2, Q1}

COBRA was enacted in 1985 and applies to all private-sector employers who have more than 20 employees.^{2 Q3} Depending on where you live, your state may have state-level COBRA laws, dictating employers follow another set of guidelines in addition to the federal COBRA rules. ^{2 Q3}

Although COBRA allows you to keep your group health coverage, it tends to be more expensive than the cost of the plan when you were an active employee, as the employer can charge you the full premium amount under COBRA.^{2 Q2}

Cobra Eligibility & Process

To be eligible for and entitled to elect COBRA continuation coverage, you must satisfy a list of requirements. Specifically, you need to ensure that you must be enrolled in a qualifying health plan, the health plan must be covered by COBRA, you must have experienced a qualifying event, and you must be a qualified beneficiary of that event.^{2 Q5 & Q6}

• Personal eligibility—You can only be eligible for COBRA coverage if you were enrolled in your employer’s health plan when you worked for the employer and the health plan remains effective for other active employees. If this is the case, if you were to experience a qualifying event, you could elect to continue group health coverage through COBRA. You can also apply for COBRA if you were a member of the policyholder’s family who is eligible for COBRA continuation coverage following a qualifying event. ^{2 Q5 & Q6}
• Plan COBRA coverage—You can only elect COBRA continuation coverage if your group health plan was subject to COBRA coverage. COBRA covers group health plans for employers that employed at least 20 employees (full- and part-time employees count toward the calculation) on more than half of its standard business days in the previous calendar year. ^{2 Q5}
• Qualifying event—You can only elect COBRA continuation coverage if you experience a qualifying event that, without the option of COBRA Continuation Coverage, would cause you to lose access to the group health plan. ^{2 Q5}
  • Covered employees—For covered employees, qualifying events could include termination for any reason other than gross misconduct, leaving the job, or a reduction in the number of hours of employment.
  • Covered employees’ dependents—For spouses or dependents of a covered employee, COBRA continuation coverage could be elected if qualifying events occur, such as the covered employee’s termination (for any reason other than gross misconduct), covered employee’s reduction in hours, the covered employee becomes eligible for Medicare, divorce or legal separation, the covered employee dies.
  • Loss of dependent status—If a dependent child reaches the age of 26 and is no longer eligible to remain as a dependent on the covered employee’s health plan, the no-longer-eligible dependent child could elect COBRA coverage.
• Beneficiary—To be eligible to be entitled to elect COBRA coverage, the person electing coverage must be a beneficiary, who is an individual who was covered by the group health plan on the day before the qualifying event occurred and resulted in a loss of coverage. ^{2 Q5}

There may be specific eligibility rules imposed for your employer’s plan, depending on where you live. Check with the state’s insurance office to learn more about state-specific COBRA rules.

How Much Does Cobra Cost?

The cost of COBRA continuation coverage can vary greatly. What plan you have, how many dependents may be on your plan and electing coverage through COBRA, and how much cost-sharing is pushed to you will determine your COBRA premiums. Generally speaking, COBRA coverage is expensive. Your group health plan can require you to pay for all of the costs (premiums) associated with coverage through COBRA, plus an additional 2% charge for administrative costs. ^{2 Q15} This means that if you elect COBRA, you may have to pay 102% of the cost of the plan that active employees covered under the group health plan pay.^{2 Q15}

Depending on your employer and your situation, your employer may elect to pay for a certain time’s worth of COBRA coverage as part of a severance package. ^{2 Q15} You may also be eligible for a tax credit to help offset some of the costs associated with high COBRA premiums. ^{2 Q16} Failing to pay your COBRA premiums could result in termination of coverage. ^{2 Q15}

Under HIPAA, you and your dependents may become eligible for a special enrollment period under a spouse’s health plan or the Health Insurance Marketplace, allowing you to enroll in coverage under those plans, which could potentially be more cost-effective than COBRA continuation. ^{2 Q4}

What Does Cobra Insurance Cover?

COBRA coverage is required to provide the same level of benefits that you were afforded before the qualifying event that caused you to no longer be enrolled under the group health plan as an active employee. Call the number on the back of your insurance card to find out what mental health and substance use disorder treatment coverage benefits you had under your group health plan. Knowing this will help you understand the benefits COBRA continuation coverage may be able to provide.

What Should I Do if COBRA Won’t Cover the Total Cost of Rehab?

Depending on your specific health plan, it may not cover the total cost of rehab. If this happens to you, you may be responsible for paying for the remaining costs out of pocket. Some rehab centers may offer alternate payment options, which you can potentially use to help offset the costs of care. Some of these options may include special financing, credit cards, or payment plans.

Others may include applying for grants or scholarships. Be sure to ask the rehab center you attend whether there are payment options available to you if your insurance doesn’t cover the costs of care.

Does COBRA Include Mental Health Treatment Facilities?

Under the Affordable Care Act, almost all U.S. health plans are federally mandated to provide some level of coverage for mental health and substance use disorder treatment.³ This means that your group health plan, and subsequently COBRA continuation coverage of said group health plan, may be required to provide coverage in some capacity for mental health treatment.

Every plan is different in regards to how it covers mental health treatment, including copays, limits, and other cost-sharing requirements. Call the number on the back of your plan card or work with a rehab center directly to find out more about how your plan may cover treatment.

Does COBRA Cover The Cost Of Partial Hospitalization Programs?

Whether COBRA covers the cost of partial hospitalization programs (PHPs) will depend on how your group health plan covered this type of treatment. Although the ACA mandates coverage for mental health and substance use disorder treatment, coverage details can vary. Work with the rehab center directly to find out what your COBRA insurance coverage for PHPs may include. You can also find out more about your plan’s summary of benefits and coverage by calling the number on the back of your insurance card.