If My Employer Goes Out of Business Will I Still Be Eligible for COBRA?

Yes. If your employer declares bankruptcy, you will be eligible for COBRA coverage under their established criteria. The bankruptcy, will normally take one of two forms: liquidation under Chapter 7 or reorganization under Chapter 11.

In a Chapter 7, your employer will be liquidating assets to pay off creditors and therefore cease to exist. Therefore, it’s possible that your health and/or pension benefits could be lost in the process.

In a Chapter 11 bankruptcy, your employer will continue to do business under the protection of the court while it reorganizes its finances. Chapter Eleven Bankruptcies may or may not affect your healthcare benefits or pension plan. In many cases, your plan will continue operating throughout the process.

If your employer files for bankruptcy, contact the administrator of each plan or your union representative to get an explanation of the status of your benefits. Your plan’s summary will let you know how to get in touch with your administrator.