Consolidated Omnibus Budget Reconciliation Act (COBRA)

Throughout a career, workers will face multiple job changes or even job losses. A law enacted in 1986 help workers and their families keep their group health benefit coverage during times of job loss, reduction in the hours worked, transition between jobs and in certain other cases.

The law - the Consolidated Omnibus Budget Reconciliation Act (COBRA) - gives workers who lose their health benefits the right to choose to continue group health benefits provided by the plan of a previous employer under certain circumstances.

COBRA requires that most employers sponsoring group health plan offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the employee's plan would otherwise end.

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 employee's employment for reasons other than "gross misconduct";
reduced hours of work for the employee;
eligibility for Medicare coverage for the employee;
divorce or legal separation of a covered employee;
death of a covered employee; or
loss of status as a "dependent child" under plan rules

Under COBRA, the affected 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. The following represents a basic overview of some basic information on periods of continuation coverage:

Beneficiary Qualifying Event Period of Coverage

Employee
Spouse
Dependent child Termination
Reduced hours 18 months*

Spouse
Dependent child Employee entitled to Medicare
Divorce or legal separation
Death of covered employee
36 months

Dependent child Loss of dependent status 36 months

*This 18-month period may be extended for all qualified beneficiaries if certain conditions are met in cases where a qualified beneficiary is determined to be disabled under COBRA.

However, COBRA also provides that your continuation coverage may be cut short in certain cases

Notification Requirements:

An initial general notice must be furnished to covered employees and spouses informing them of their rights under COBRA and describing provisions of the law. COBRA information also is required to be contained in the summary plan description which participants receive.

When the plan is notified that a qualifying event has happened, it must in turn notify the covered person(s) of the right to choose continuation coverage.

COBRA allows at least 60 days from the date the covered person would lose coverage because of one of the qualifying events to inform the plan administrator that the covered person wants to elect continuation coverage.

Under COBRA, the employee or a family member has the responsibility to inform the plan of a divorce, legal separation, disability or a child losing dependent status under the plan.

Employers have a responsibility to notify the plan of the employee's death, termination of employment or reduction in hours, or Medicare eligibility.

If covered individuals change their marital status, or their spouses have changed addresses, they should notify the plan administrator.