Consolidated Omnibus Budget Reconciliation Act (COBRA)

From SmartMedicalConsumer Wiki

This federal law - the Consolidated Omnibus Budget Reconciliation Act (COBRA) — gives workers and their families the right to choose to continue the group health benefits provided by their employer' health plan, during times of voluntary or involuntary job loss, reduction in the hours worked, transition between jobs and in certain other cases.

COBRA, enacted in 1986, offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

The law generally covers group health plans maintained by employers with 20 or more employees in the prior year. It applies to plans in the private sector and those sponsored by state and local governments. Provisions of COBRA covering state and local government plans are administered by the Department of Health and Human Services.

Several events that can cause workers and their family members to lose group health coverage may result in the right to COBRA coverage. These include:

• Voluntary or involuntary termination of the covered employee’s employment for reasons other than gross misconduct

• Reduced hours of work for the covered employee

• Covered employee becoming entitled to Medicare

• Divorce or legal separation of a covered employee

• Death of a covered employee

• Loss of status as a dependent child under plan rules

Under COBRA, the employee or family member may qualify to keep their group health plan benefits for a set period of time, depending on the reason for losing the health coverage.

COBRA continuation health coverage lasts in general for 18 months. The employee has to pay the 100 percent of the premium and a two percent administrative fee.

Besides the federal law, many states have their own "mini-COBRA" laws that give workers at firms with between two and 19 employees the right to purchase continuation of health plan. Check your State-specific laws for COBRA.

See also HHS publication about COBRA continuation of coverage