What is COBRA?
In 1986 Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) which provides continuation of group health insurance coverage that otherwise might be terminated. This coverage does not continue if the group plan is discontinued. The law generally covers employer groups with 20 or more employees.
Who is eligible for COBRA?
An employee, their spouse and dependent children are eligible for continuation if:
- the company employs over 20 employees at least 50 percent of the year.
- a “qualifying event” occurred (see list below)
- you are covered by employer’s plan when a qualifying event occurs.
Qualifying events include:
- Loss of job or cut hours – the employee, their spouse, and dependent children are eligible
- Divorce or legal separation – a spouse and dependent children are eligible
- Eligibility for Medicare (turning 65 years old) – a spouse and dependent children are eligible
- Death of the employee – a spouse and dependent children are eligible
- A child becomes no longer a dependent – the formerly dependent child is eligible
How does it work?
COBRA provides the right to continue group health plan for a temporary period of time to those that have lost their employer-sponsored group health insurance plan. Once you are eligible for COBRA, the employer is required by law to inform you of your access to continuation of coverage within a 30-day period. Your COBRA coverage must provide the exact same benefits as your old group plan – and any pre-existing health conditions will be covered without waiting periods. If premiums for your old plan go up, your COBRA premiums will increase at the same rate.
How long does COBRA last?
COBRA beneficiaries are generally eligible for group coverage due to termination or reduction of hours for a maximum of 18 months. There are a few qualifying events, or a second qualifying event during the initial period of coverage that may permit a beneficiary to receive a maximum of 36 months of coverage.
Employers may offer longer periods of COBRA coverage but are only required to do so under special circumstances, such as disability (yours or a family member’s), your death or divorce, or when your child ceases to meet the definition of a dependent child under the health plan. Over the age of 55 and divorced, coverage may extend until age 65 when medicare eligible.