Consolidated Omnibus Budget Reconciliation Act COBRA

The Consolidated Omnibus Budget Reconciliation Act or COBRA was enacted in 1986 to allow workers to keep their group health insurance coverage for a specific amount of time after the loss of employment. COBRA allows for the extension of health care coverage, or continuation coverage, even after the plan would normally end for the employee. COBRA specifically applies to health plans sponsored by state, private, or governmental employers with 20 or more employees in the prior year.

Who qualifies for COBRA?

COBRA is offered to workers and their families under specific "qualifying" conditions. For example, workers who are voluntarily or involuntarily terminated, unless for gross misconduct, may receive COBRA coverage up to 18 months. Workers also can receive COBRA if their hours are reduced or if they are becoming entitled to Medicare.

Finally, family members who are separated from a covered employee by death, divorce or legal separation may receive COBRA for a specified time period of 36 months. Children of covered workers may also receive COBRA coverage for 36 months after their status as a dependent has ended.

Who pays for COBRA coverage?

One of the biggest complaints about COBRA coverage is the cost, which can frequently cost up to $6,000 per year. Although a worker and their family may be entitled to continuing healthcare, often the cost is prohibitive. For example, qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.
Failure to make timely payments may result in loss of coverage. The cost may also be increased every 12 months.

Registering for COBRA

Employers are supposed to give the employee a COBRA medical health insurance election form within 14 days from a qualifying event. The form must be completed within 60 days. All covered family members must be listed on the form. The premium check must also be paid with the registration form.

More information about COBRA policies and procedures can be found on the U.S. Department of Labor or you can contact your insurance company.