COBRA

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a federal law in effect since 1986. COBRA permits many employees and their dependents, in some circumstances, to continue on an employer's group health plan even after coverage would otherwise end.

Length of COBRA coverage

This temporary continuation coverage lasts between 18-36 months, and can be critically important for people who hope or expect to have access to other coverage down the road (for example, while they are between jobs or waiting to qualify for Medicare.). However, COBRA protections are also limited. Not everyone who loses group health coverage is eligible for COBRA. Even when you are, the former employer is not required to make premium contributions for COBRA coverage. For this reason, many people who would like to remain covered under COBRA cannot afford to do so.

Eligibility for COBRA

In general, any individual who, on the day before a qualifying event, is covered under a group health plan maintained by an employer with 20 or more workers, is eligible for COBRA. This includes (1) the covered employee, (2) the spouse of the covered employee, and (3) the dependent child of the covered employee. A qualifying event for the covered employee/spouse or dependent is an event that causes the individual(s) to lose health benefit coverage.

Generally, you are not eligible for COBRA if you are enrolled in another group health plan, although exceptions apply if the other group health plan imposes a waiting period or pre-existing condition exclusion period.

There are six events that can require a plan to offer COBRA continuation coverage:

• The employee's voluntary or involuntary termination of employment (except for gross misconduct) or reduction in hours of employment
• The employee's death
• The employee's divorce or legal separation from his/her spouse
• The employee's entitlement to Medicare benefits
• A dependent child ceasing to be a dependent under the terms of the plan
• The employer's filing for bankruptcy (applies only to retirees with retiree health benefits).

If your employer has less than 20 employees

If you work for a small employer with fewer than 20 workers, you may have continuation rights similar to COBRA under your state laws. Many states have passed continuation laws that apply to small group health insurance policies sold to employers with 2-19 workers.

Speak to your employer's Human Resources Department for additional information on the COBRA or state continuation policy that may be available to you and your dependents.