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Information on COBRA Laws

The Consolidated Omnibus Budget Reconciliation Act is a law passed in 1986 to help employees keep their group health insurance benefits when they face job loss or changes. The law requires employers of 20 or more workers in the previous year to offer COBRA to eligible workers, who can choose to participate in the program. Continuation coverage under COBRA, which is a temporary extension of coverage for a set period, maintains group health insurance benefits for the worker and his eligible family members.

  1. Employers

    • The COBRA law covers health plans administered by private, state and local government employers. The law requires employers to notify health plan administrators when workers are eligible for COBRA. When COBRA coverage begins, the law requires employers to provide employees and spouses with an initial notice that explains COBRA. The law also requires health plan administrators to notify qualified beneficiaries of their COBRA rights and allows 60 days for employers to notify health plan administrators that a worker has chosen continued coverage under COBRA.

    Eligibility

    • Qualified beneficiaries include persons covered by the employer's group health benefit insurance on the day before a qualifying event. The person must be an employee, spouse, dependent child, or a child born or adopted during COBRA coverage. Retired employees and qualified family members are eligible for COBRA in some situations. Other individuals, such as agents or independent contractors, who are covered under the employer's group health insurance plan may be eligible for COBRA coverage.

    Qualifying Events

    • You are eligible for COBRA benefits if you face loss of health benefit coverage because of job loss for reasons other than misconduct or reduced work hours for the covered worker. Workers transitioning between jobs are also eligible to participate in COBRA. Employees and family are also eligible if the covered worker becomes eligible for Medicare, dies, becomes legally separated or divorces. Individuals who are no longer considered dependent children under the terms of the covered worker's health plan also may be eligible for COBRA. COBRA requires covered individuals to notify health plan administrators of changes in address or marital status.

    Extended Coverage Periods

    • The length of the temporary insurance coverage depends on the reason for your loss of health coverage. The employee, spouse and dependent children receive up to 18 months of benefits for job loss or reduced hours. The COBRA law extends the 18-month period in cases where a qualified beneficiary is considered disabled. The extension period is 36 months for the spouse and dependent children of a covered worker who becomes Medicare-eligible, divorces or legally separates.

    Coverage and Payments

    • COBRA entitles qualified beneficiaries to the same coverage provided under the employer's group health plan. Some plans require beneficiaries to pay for coverage under COBRA; however, insurance premiums cannot exceed 102 percent of the amount paid for non-COBRA coverage under the same health plan. Health plans may charge an additional 2 percent for administrative costs. The allowable premium amount for the disability extension is 150 percent of regular premiums. Health plans may cancel COBRA coverage if premiums are not paid on time.

    Tips

    • The Department of Health and Human Services administers COBRA for state and local government health plans

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