The Consolidated Omnibus Budget Reconciliation Act (COBRA). Allows employees and their beneficiaries the option to keep
group health coverage at group rates temporarily, after certain qualifying events that would otherwise terminate their eligibility
for the coverage, likely at the consumer’s own cost.
COBRA is a law, not a Health Plan
COBRA requires group health plans to provide temporary continuation of group health coverage that otherwise might be terminated.
Continuation of coverage is only available when coverage is lost due to certain specific events.
Employers decide whether or not they will contribute to their employee’s premiums under COBRA. Consumers may be responsible for the entire monthly premium by themselves. The amount COBRA participants contribute to group health coverage is usually more than the amount active employees contribute toward the group coverage. Cost to COBRA participants full premium cannot exceed 102 percent of the cost to the plan for similarly situated individuals who
have not incurred a qualifying event.
Who Qualifies for COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) contains provisions giving certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of group coverage at group rates. If the consumer’s employer is required to comply with COBRA, then they are eligible for it after just having one day of coverage as an active employee or dependent of an active employee on their group health plan.A COBRA “qualifying event” is what triggers a consumers’ ability to exercise their COBRA rights.
COBRA Qualifying Events
Qualifying events include:
Death of the current employee;
Loss of eligibility for the group health plan due to voluntary or involuntary termination or a reduction in hours as a result of resignation, discharge (except for “gross misconduct”), layoff, strike or lockout, medical leave, or slowdown in business operations
Divorce or legal separation that terminates the ex-spouse’s eligibility for benefits
A dependent child reaching the age at which he or she is no longer eligible for coverage as a dependent of an active employee under
the group plan (generally age 26).
How long can a consumer stay on Cobra?
When consumers elect COBRA coverage due to termination of employment or a reduction of hours, they are generally allowed up to an additional 18 months of group health coverage. Otherwise, they have up to an additional 36 months of group health coverage.
Extensions:
Dependents for a covered employee who become eligible for Medicare – if a covered employee becomes entitled to benefits (either
Part A or Part B) and later has a termination of employment or a reduction of employment hours, the period of COBRA coverage for the
employee’s spouse and dependent children lasts until the later of the 36-month period that begins on the date the covered employee
became entitled to Medicare, or the 18 – or 29 – month period that begins on the date of the covered employee’s termination of employment or reduction of employment hours.
Disability – additional 11 months for a total of 29 months.
Second qualifying event—e.g., Divorce or death— up to an additional 18 months for a total of 36 months.
COBRA coverage may end earlier if: An individual does not pay premiums on a timely basis. The employer ceases to maintain any group health plan. After the COBRA election, an individual obtains coverage with another employer group health plan. After the COBRA election, a beneficiary first becomes enrolled for Medicare benefits. However, if Medicare entitlement, either Part A or Part B, is effective on or before the date of the COBRA election, COBRA coverage may
not be discontinued on account of Medicare enrollment, even if the individual enrolls in the other part of Medicare after the date of the
election of COBRA coverage.
COBRA Qualifying Events
The COVID-19 pandemic has been declared a national emergency, and many consumers are experiencing changing jobs and job loss. If your health care coverage ends because you lose your job, have your hours reduced, or get laid off, you may have rights to certain
health benefit protections even if you lose your job. If you worked for an employer with 20 employees or more and your company provided a group health plan, you may be entitled to
continued health benefits, otherwise known as COBRA.
You also may have more affordable or more generous options for health coverage available to you and your family through other group health plan coverage, such as through a spouse’s plan, the individual Marketplace, and certain governmental programs. You also may have more affordable or more generous options for health coverage available to you and your family through other group health plan coverage, such as through a spouse’s plan, the
individual Marketplace, and certain governmental programs. COBRA may give you the opportunity to purchase temporary extended health care benefits offered by your former employer
while you are looking for a new job or during a waiting period for health benefits imposed by your new employer. COBRA provides continuity of coverage, because you stay in exactly the same plan you were in when you were employed, with the
same network of doctors and hospitals, and same deductible.
COBRA may give you the opportunity to purchase temporary extended health care benefits offered by your former employer
while you are looking for a new job or during a waiting period for health benefits imposed by your new employer. COBRA provides continuity of coverage, because you stay in exactly the same plan you were in when you were employed, with the
same network of doctors and hospitals, and same deductible.
Timelines to Elect COBRA Coverage
Timelines to elect COBRA coverage: Consumers have until the later of 60 days after losing eligibility for their employer’s group health coverage or 60 days after receiving their COBRA election notice to enroll in COBRA. Consumers have 45 days after enrollment to pay their first month’s premium. COBRA coverage will generally begin retroactively on the date consumers’ active-employment-based group health coverage
ended, as long as the election is made within the 60-day election period for COBRA coverage.
Which Employers are Required to offer Cobra?
Which employers are required to offer COBRA? Employers with 20 or more employees are usually required to offer COBRA coverage and to notify their employees of the availability of
such coverage. COBRA applies to plans maintained by private-sector employers and plans sponsored by most state and local governments.
What Benefits must be covered by Cobra?
What benefits must be covered by COBRA? COBRA coverage must provide identical benefits to that available to similarly situated enrollees who are not receiving COBRA coverage under the plan (generally, the same coverage that the beneficiary had immediately before qualifying for continuation coverage). A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. Qualified beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.
