|  | Healthcare Industry | Health Insurance

The Rights Under COBRA to Replace Health Insurance

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, establishes a means for employees to continue health coverage when terminated from an eligible employer. Each eligible employee has the right of up to 18 months of continued health care coverage. An employee can extend this window for up to 36 months depending on extenuating circumstances such as a qualified disability.

  1. Required Employer Participation

    • All private-sector employers with at least 20 employees and group employee health plans must participate in continued health care under COBRA. State and local government departments must participate in continued COBRA health coverage regardless of the number of workers employed by the particular division. These regulations do not apply to departments of the federal government, religious organizations and most church-related organizations. COBRA does not consider life insurance as medical care for the purposes of continued health coverage.

    Qualifying Coverage Events

    • A qualifying event for COBRA continued health insurance is any occurrence that causes an employee to lose his group health care coverage. This includes voluntary dismissal, employer layoff and involuntary termination for almost any reason. An exception occurs when an employer terminates a worker for gross misconduct. A termination of this type renders an employee ineligible for COBRA health coverage. Gross misconduct may include repeated violations of company policy, state or federal safety violations and violence or harassment within the workplace.

    Qualifying Event Notice

    • An employer has up to 30 days to notify his insurance company of a covered worker's termination due to a qualifying event. An employer's health insurance company must notify a worker losing health coverage within 14 days of the employee's eligibility under COBRA. This notice must include details of COBRA coverage including the approximate cost of continued care. The former employee has up to 60 days to consider the option to elect COBRA coverage. The health insurance company cannot shorten this waiting period and must grant the former employee this right.

    Rights of Cost

    • An employer has the right to require a former employee to pay the entire cost of continued health coverage under COBRA plus a two percent administrative fee. This means the former employee will no longer enjoy the discount on her premium once afforded by her participation in group health insurance. The employee may be unable to afford the total cost of continued health care under COBRA as a result. COBRA must match the employer's former health care plan exactly and can make no changes to the plan including raising deductible amounts to generate a lower monthly premium.

Health Insurance - Related Articles