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COBRA Health Insurance Limits

The federal Consolidated Omnibus Reconciliation Act requires covered employers to provide their terminated employees with optional health coverage for a limited period after severance. Employers with at least 20 employees are required to comply with the federal COBRA regulations. Additionally, government agencies that provide or offer group health insurance coverage plans to their employees must comply with the COBRA regulations.

  1. Terminated Employees

    • Employers must offer COBRA coverage to their employees who leave voluntarily or leave involuntarily. As long as the employee's own gross misconduct did not lead to job termination, employers must provide the optional coverage.

    COBRA Benefits

    • Covered employers must provide their terminated employees with continuing group health coverage for 18 months after termination. Although employers are no longer required to pay for the coverage, employers must provide their terminated employees with optional coverage to cover the employee and any of the employee's dependents before the employer terminated that employee. Employees must have the same types of health care benefits through the COBRA continuation coverage the employee had during employment.

    American Recovery and Reinvestment Act

    • As part of a nationwide effort to stimulate the economy, Congress passed new tax laws, housing laws, health care laws and labor laws. Employers who terminated employees during part of 2009 and before May 31, 2010, were required to subsidize COBRA health coverage for employees and their dependents as long as they were not eligible to receive different group health care coverage or Medicare coverage. Under the COBRA premium reduction laws, employees only had to pay for 35 percent of their COBRA coverage premiums for 15 months. After 15 months, employers can require their terminated employees to pay the entire COBRA coverage premiums. Employers terminating employees after May 31, 2010 are no longer required to subsidize the insurance premiums.

    COBRA Premiums

    • Employees may pay for optional health coverage through COBRA for up to 18 months after termination. After May 31, 2010, employers may require employees to pay the entire premium coverage amount to remain covered under the group health care plan. Employers may charge employees with a 2 percent fee for administrative costs beyond the 100 percent coverage fee, totaling 102 percent.

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