Individuals electing COBRA coverage must pay the full premium.
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law that provides continuation of group health insurance for certain individuals at their own expense. COBRA requires group health plans to make identical coverage available for a limited time to qualifying individuals who might otherwise lose their coverage.
Plans
COBRA coverage applies to group health plans offered by businesses that had at least 20 employees for more than half of the previous calendar year, and to health plans maintained by state and local government. Insured and self-insured group plans, HMOs, group dental and vision plans, and employee assistance plans are all subject to COBRA. Health-oriented flexible spending accounts, employer-sponsored discount plans managed by a health care clinic, and employer-reimbursed health plans that provide bridge coverage are also subject to COBRA, although some restrictions may apply. Federal employee or military plans, disability plans, long-term care coverage, employer contributions to a medical savings account, and certain church-sponsored plans are not subject to COBRA.
Eligibility
Qualified COBRA beneficiaries include employees who were employed and enrolled in a group health insurance plan the day before a qualifying event; their spouses, including former and widowed spouses; and dependent and adult children who have aged out of a parent's group health plan. Children born or adopted during COBRA coverage also qualify. Adult children do not qualify for COBRA if they are eligible for health insurance through their own employer.
Qualifying Events for Employees
Qualifying events for employees are voluntary or involuntary termination for reasons other than gross misconduct; a reduction in hours; disability of the employee or a covered dependent at the time of COBRA election, or within 60 days of that election; or notification that the employee will not be returning to work after a leave of absence under the Family and Medical Leave Act.
Qualifying Events for Spouses
Qualifying events for spouses include the employee's termination for reasons other than gross misconduct; a reduction in the employee's hours; death of the employee; and divorce or legal separation from the employee. The spouse is also eligible for COBRA if the employee goes on Medicare.
Qualifying Events for Children
Qualifying events for children are generally the same as for a spouse, except that they include reaching the maximum age for coverage on a parent's plan or losing dependent child status upon completion of school. The Health Care Reform Act of 2010 has resulted in some changes to the law regarding coverage of adult children. Adult children can stay on a parent's health plan until they reach the age of 26, regardless of where they live or their marital status. Adult children who reach the age of 26 can continue their health coverage on their parent's plan by electing COBRA, provided they are not eligible for health insurance through their own employer. However, COBRA coverage does not apply to a married child's spouse or children.
Election Period
As of 2010, employers must notify the health plan administrator within 30 days of the employee's death, termination, reduction in hours, or entitlement to Medicare benefits. Qualified COBRA beneficiaries must notify the administrator within 60 days of divorce, legal separation, or a child's loss of dependent status. The administrator must deliver election notice to the employee or qualified beneficiary in person, or by first-class mail, within 14 days of notification of the qualifying event. The beneficiary must elect COBRA within 60 days of receipt of the election notice to continue health coverage under the employer-sponsored plan. If you waive COBRA coverage in writing, you can change your mind provided you accept coverage within the original 60-day election period.
Coverage Period
COBRA coverage can last from 18 to 36 months, depending on the beneficiary and the qualifying event. As of 2010, employees who elect COBRA due to a reduction in hours or termination are eligible for 18 months of coverage. Spouses and dependent children electing COBRA due to divorce, legal separation or death qualify for 36 months of benefits. Coverage due to disability lasts for 29 months. Medicare entitlement qualifies a spouse and dependent children for 18 to 36 months of COBRA coverage, depending on the covered employee's employment status.
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