The COBRA Health Insurance Law is formally known as the Consolidated Omnibus Budget Reconciliation Act. This federal law was passed in 1985 and enacted in 1986 to afford employees and their family members the right to elect to continue their existing benefits under the employees' group health insurance plan after a "qualifying event" that makes employees no longer eligible for employer-provided health insurance.
Qualifying Events Under COBRA
COBRA health insurance is extended to employees and their covered beneficiaries (spouses and children) after certain events that qualify them for continuation of health coverage. An employee is eligible for coverage when she voluntarily quits a job or is fired (except for reason of gross misconduct) or when working hours are reduced so that the employee is no longer eligible for group health benefits. Other qualifying events include death, divorce or legal separation and change in Medicare eligibility status.
Who's Eligible for COBRA Health Insurance
Employees who quit their jobs, are terminated or experience reduction in work hours aren't the only qualified beneficiaries who can elect to receive COBRA health insurance; spouses can individually elect to continue the coverage for themselves and their children if they separate from or divorce the covered employee or if the employee dies. Also, the U.S. Department of Health & Human Services notes that if the employee retires and enrolls in a retiree health plan offered by an employer, the spouse and children can get COBRA health insurance in the event that the retiree health plan doesn't cover dependents.
Electing to Continue Coverage
A beneficiary who qualifies for COBRA health insurance is given an election period of 60 days during which to decide if he wants continued coverage. The Department of Labor notes that if a qualified beneficiary initially waives coverage, he can revoke the waiver before the 60-day election period is up. COBRA health insurance will then take effect (but will not be retroactive). In all other instances, coverage is retroactive as of the date on which original coverage was terminated, as long as the beneficiary elects continuation of coverage and pays the first premium within 45 days. The DOL notes that premiums are generally paid for by the beneficiary. Costs cannot exceed 102 percent of the plan.
Duration of Coverage
The DOL notes that in most cases, COBRA health insurance lasts for up to 18 months for employees and their spouses and dependents when a job ends or hours are reduced. The DOL states that qualified beneficiaries can extend this period for up to 29 months if they become disabled within the first 60 days of COBRA health coverage. Spouses and dependent children may receive 36 months of coverage if they lose employer-provided coverage due to a covered spouse's death, divorce or separation or other circumstances (see Resources).
When COBRA Continuation Coverage Ends
COBRA health insurance can end prematurely in certain circumstances, such as if premiums are not paid on time or the employer drops the group health plan. If the beneficiary becomes eligible for Medicare, COBRA health insurance may end (unless Medicare was obtained prior to the election). If the beneficiary receives health insurance through a new employer, COBRA health insurance may end depending on the stipulations in the new policy with respect to pre-existing conditions. But if the beneficiary gets group health insurance prior to electing to keep COBRA health insurance, it cannot be discontinued.
Questions About Continued Coverage
The DOL notes that COBRA typically applies to employers with 20 or more employees. Those who work in the private sector who have questions about their eligibility for COBRA health insurance should contact the Employee Benefits Security Administration at (866) 444-3272 or (202) 219-8776. Federal employees with a Federal Employees Health Benefit Plan should contact their agency's human resources division or the Office of Insurance Programs at (202) 606-0745.
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