COBRA Insurance Texas: How to Keep Your Health Coverage After a Job Ends

How COBRA insurance Texas rules work

COBRA is not an insurance company or a separate plan. It is a federal law, the Consolidated Omnibus Budget Reconciliation Act, that gives you the right to stay on the health plan you already had through work. Your doctors, network, deductible, and benefits stay the same. What changes is who pays. While you worked, your employer usually paid a large share of the premium. On COBRA you generally pay all of it, plus a small administrative charge.

Texans have two layers of protection. Federal COBRA, overseen by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), covers private employers with 20 or more employees. Texas continuation, set out in the Texas Insurance Code and overseen by the Texas Department of Insurance (TDI), covers group plans that are bought from an insurance company and regulated by the state. That second layer matters most if you worked for a small business.

One limit to know early: Texas continuation rules do not apply to self-funded plans, where the employer pays claims itself instead of buying insurance. TDI notes this on its consumer guide. Many large employers are self-funded, so their workers rely on federal COBRA alone. If you are not sure which kind of plan you had, the plan documents or your benefits office can tell you.

Federal COBRA rules for larger employers

The Department of Labor says COBRA generally applies to group health plans of employers with 20 or more employees in the prior year. Both full-time and part-time workers count toward that number. State and local government plans have similar rules under a different federal law, and federal employees have their own continuation program, so ask your benefits office which applies to you.

Events that qualify

You, your spouse, and your dependent children can become “qualified beneficiaries” when coverage ends because of:

• Losing your job for any reason other than gross misconduct, including quitting or being laid off.
• A cut in your work hours that ends your eligibility for the plan.
• The covered employee’s death, divorce or legal separation, or becoming entitled to Medicare (for the spouse and children).
• A child aging out of dependent status under the plan’s rules.

Each family member has an independent right to elect COBRA. A spouse or child can take it even if the former employee does not.

Deadlines you cannot miss

According to EBSA’s COBRA FAQs, the plan must send you an election notice within 44 days of a job loss or cut in hours. For a divorce or a child losing dependent status, you must tell the plan within 60 days, and the plan then has 14 days to send the notice. Once you have the notice, you get at least 60 days to elect, counted from the later of the day coverage ends or the day the notice is sent.

After you elect, you have 45 days to make the first payment. Coverage is retroactive to the day your job-based plan ended, so the first payment may cover more than one month. After that, each monthly payment has a 30-day grace period. If you pay within it, coverage must continue. If you miss it, the plan can end your coverage for good.

How long coverage lasts

The length depends on why coverage ended. The Department of Labor lists these maximum periods:

COBRA can end earlier if premiums are not paid on time, if the employer stops offering any group health plan, or if you gain other group coverage or Medicare after electing COBRA. For the disability extension, you must send the plan a copy of the Social Security decision within the time your plan sets, so read your notice closely.

What COBRA costs each month

The Department of Labor says the plan can charge up to 102% of its cost for the coverage. That is the full premium, including the part your employer used to pay, plus 2% for administration. During the 11-month disability extension, the plan can charge up to 150% for the disabled person’s coverage.

Here is a simple example. Say the total premium for your plan is $700 a month and you paid $150 from each paycheck while working. On COBRA, the plan could charge up to $714 a month ($700 plus 2%). Your pay stubs show only your share, so ask your benefits office or the COBRA administrator for the real total before you decide.

Some employers agree to pay part of COBRA as part of a severance deal. If you are negotiating a separation agreement, it is fair to ask. You generally cannot get Marketplace premium tax credits for months you are enrolled in COBRA, which is why comparing prices matters so much.

Texas state continuation for smaller employers

If your employer had fewer than 20 workers, federal COBRA usually does not apply. Texas fills part of that gap. Under Texas Insurance Code sections 1251.251 to 1251.255, insurers and group hospital service corporations that sell group hospital, surgical, or major medical coverage must offer continuation. Here is how it works:

• Who qualifies: an employee, member, or dependent whose coverage ends for any reason other than involuntary termination for cause, and who was continuously covered for at least three months before it ended. The law says termination for a health-related reason does not count as “for cause.”
• How to ask: send your employer or the group policyholder a written request within 60 days after the later of the date coverage would end or the date you get notice of your right to continue.
• What you pay: each month, the amount the employer requires plus 2% of the group rate. The first payment is due within 45 days of your election. Later payments are on time if made within 30 days of the due date.
• How long: up to 9 months after you elect, if you are not eligible for COBRA.

Texas continuation ends early if you stop paying, the employer drops the group plan entirely, you are or could be covered by Medicare, or you become covered by or eligible for similar group benefits elsewhere. Specified-disease and accident-only policies are not included.

Six extra months after federal COBRA

The same Texas law also helps people who do have federal COBRA. If your plan is an insured plan regulated by Texas, you may continue for six additional months after your COBRA period ends. TDI’s consumer guide says that with this extension, an employee can keep coverage for 24 months, and a spouse, former spouse, or dependent child for up to 42 months. Self-funded plans are not required to offer this extra time.

Coverage for spouses and children after divorce or death

A separate part of Texas law, Insurance Code sections 1251.301 to 1251.310, protects family members on insured group plans. If a spouse or child loses eligibility because of a divorce or the retirement or death of the employee, the policy must let them continue with the group. The main rules are:

• The family member must have been covered under the group for at least one year, or be an infant under one year old.
• The employee (or the dependent) should notify the plan in writing within 15 days of a divorce.
• The dependent must give written notice of wanting to continue within 60 days of the divorce, retirement, or death.
• The premium cannot be more than the plan would have charged had the family relationship not ended. The plan may add a monthly administrative fee of up to $5.
• Coverage can last until the third anniversary of the divorce, retirement, or death, unless premiums stop or the person becomes eligible for similar coverage.

These rights can overlap with federal COBRA. If both apply, compare the costs and lengths and ask the plan in writing which option gives you more time.

Your options side by side

COBRA is one choice, not the only one. This table compares the main paths for Texans who lose job-based coverage.

Is a Marketplace plan cheaper than COBRA?

Often it is, especially if your income has dropped. Texas uses the federal Marketplace, HealthCare.gov. HealthCare.gov says losing job-based coverage qualifies you for a special enrollment period, and you can enroll within 60 days before or after the loss. Your income for the year decides whether you get help with premiums, so a job loss can lower your cost a lot.

Timing rules are strict, so read these points before you decide:

• If you enroll in COBRA and then drop it on purpose outside Open Enrollment, HealthCare.gov says that does not count as a reason for a special enrollment period. You would usually wait for the next Open Enrollment.
• You can switch from COBRA to a Marketplace plan during Open Enrollment, which HealthCare.gov lists as November 1 to January 15. Open Enrollment for next year’s coverage starts on November 1.
• When your COBRA runs out, or your former employer stops paying its share, you get a new 60-day window to enroll.

Get a Marketplace quote before you pay your first COBRA bill. Remember to compare the whole picture: premium, deductible, out-of-pocket maximum, and whether your doctors and prescriptions are in the network. If you are partway through a costly treatment, keeping the same plan through COBRA can be worth the higher price. For more on low-cost coverage, see our guide to government assistance for health insurance.

Medicaid and CHIP in Texas

Texas has not expanded Medicaid to most low-income adults, so many working-age adults without children or a disability do not qualify even with little income. Children, pregnant women, some parents and caretakers with very low income, older adults, and people with disabilities can qualify. Texas Health and Human Services runs both Medicaid and CHIP, the Children’s Health Insurance Program for kids in families that earn too much for Medicaid but cannot afford private coverage.

You can apply at any time, not just during Open Enrollment, through YourTexasBenefits.com or the Texas HHS Medicaid and CHIP page. Applying is free. HealthCare.gov advises waiting for a final Medicaid or CHIP decision before you end COBRA, so you are not left without coverage. Our Medicaid guide explains the federal rules and recent changes, and our guide to the Texas Children’s Health Insurance Program covers CHIP.

Keeping coverage after a job ends, step by step

1. Find out what kind of plan you had. Ask HR whether the employer had 20 or more workers and whether the plan is insured or self-funded.
2. Write down your dates. Note the day coverage ends, the day your election notice arrives, and your 60-day and 45-day deadlines.
3. Get a HealthCare.gov quote for your expected income this year, and check Medicaid or CHIP for your children.
4. Compare total costs, not just premiums, and check your doctors and medicines.
5. Elect in writing and keep a copy. For Texas continuation, send your written request to the employer or policyholder.
6. Pay on time and keep proof, such as a bank record or certified mail receipt.
7. File for unemployment with the Texas Workforce Commission if you lost your job, since that income can help with premiums. Our unemployment benefits guide explains how claims work.

When something goes wrong

Mistakes happen, and there are free places to turn:

• No election notice arrived. Contact the employer’s benefits office or the insurer in writing. If you think your rights were ignored, call EBSA at 866-444-3272.
• A Texas insured plan refused continuation. Call the TDI Help Line at 800-252-3439 or file a complaint with TDI.
• A payment was lost or late. Send proof of payment right away. Payments made within the 30-day grace period must be accepted.
• Marketplace questions. Call the HealthCare.gov Marketplace Call Center at 800-318-2596.

If money is tight while you sort out coverage, our guide to Texas financial assistance lists state and local programs that can help with bills.

Related guides

• Healthcare help and coverage options
• Medical hardship grants in Texas
• Texas assistance programs
• Hardship grants in Texas

Frequently asked questions

This guide is general information, not legal or insurance advice. Your plan documents and notices control your exact rights and deadlines. National Relief Program is an independent website and is not affiliated with any employer, insurer, or government agency.