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The Cobra Act of 1986

In 1986, Congress enacted the Consolidated Omnibus Budget Reconciliation Act, more commonly known as COBRA. The act gave workers the right to continue their health benefits if they lose their jobs. The United States Department of Health and Human Services reports that two-thirds of the adults in the United States receive health insurance through their employers. COBRA was an attempt to protect these people from losing their health insurance when they lost their jobs.

  1. Requirements

    • COBRA rules don't apply to every employee or company. Under federal law, a company must have at least 20 employees and must be either a private sector company, or part of a state or local government. Non-profit organizations, the military and small businesses with fewer than 20 employees aren't required to offer COBRA coverage to former employees and their families. Some states have modified these rules. For instance, in Massachusetts, employers with more than two employees must follow COBRA rules.

    Family Members

    • COBRA covers not only the employee, but his or her family members. For instance, if a family loses benefits because an employee suddenly becomes eligible for Medicare and thus no longer qualifies for an employer plan, the family, if previously covered by the employer's plan, has the option of paying for those benefits and continuing on the plan. Likewise, if an employer dies, the family can pay to continue coverage. A divorced or legally separated spouse may also be eligible for COBRA benefits.

    Benefits

    • Employees covered under COBRA and their families are entitled to remain part of the employer's group health plan for 18 to 36 months following loss of benefits due to job loss or other circumstances. Terminated employees or those who lose benefits due to a cutback in hours worked can keep benefits for 18 months, while other classes of beneficiaries, such as the surviving family of a worker who has died, can keep benefits for up to 36 months.

    Payments

    • Workers or family members who opt to take health care coverage under COBRA can be required to pay up to 102 percent of the full cost of the premium for the coverage. If the plan increases the charge for coverage during the COBRA benefit period, the employer can pass on these fee increases to the beneficiary. Under COBRA, you will generally pay more than you paid while you were employed, since many employers subsidize some part of health care coverage for their employees.

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