The Consolidated Omnibus Budget Reconciliation Act, or COBRA, is a law that allows people and their families to continue the medical coverage they had through an employer after they leave or are terminated from their job. COBRA allows people to maintain their health coverage for a set period of time.
History
COBRA was passed into law in 1986 as an amendment to the existing Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act. When it was passed, COBRA was considered groundbreaking legislation.
Identification
People must meet specific criteria to be eligible for continued medical benefits under COBRA legislation. Only employers who have 20 or more employees are required to be covered by COBRA statutes. In order to qualify for COBRA coverage, you must have been enrolled in your company's group insurance plan prior to your departure from the company, and you must have been terminated for a reason other than gross misconduct.
Time Frame
COBRA coverage rules vary from state to state. The U.S. Department of Labor requires that employees be given at least 60 days to elect coverage under COBRA, but some states give employees as long as three years to make a decision. COBRA coverage lasts for 18 months unless it is extended because of disability.
Considerations
COBRA coverage is usually less expensive than an individual plan, but it may cost more for the same coverage than you paid while employed, especially if your employer paid part of your insurance costs. You're responsible for the full premium with COBRA, and you may be charged up to 102 percent of the cost to help cover administrative fees. If your company stops offering health insurance benefits, your benefits under COBRA will stop too. COBRA coverage starts from the date your employer-provided coverage stops, so if you decide to wait before electing COBRA, you'll be responsible for paying premiums from that date rather than from your time of election.
Expert Insight
If you're not sure if you're eligible for COBRA coverage, if you have questions about how COBRA applies to your particular situation, or if you haven't gotten notification of your COBRA options within 14 days of your departure from your job, call the U.S. Department of Labor at 1-866-444-3272.
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