Do I Get COBRA Assistance If I Quit My Job?

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is a key health care legislation that gives former employees the option to stay on an employer's group health plan. Except employees terminated due to gross misconduct, most former workers are allowed to stay on the group policy after they sever their relationship with an employer.

Basics

• The Consolidated Omnibus Budget Reconciliation Act of 1986 was intended to ease the financial burden of health care for workers and their families during career transitions. The law covers a wide range of individuals, including laid off employees, retirees, spouses, former spouses and dependents of former employees. These individuals can continue accessing the group health plans of the employer after termination of employment following a qualifying event. For COBRA rules to apply, the company must have at least 20 employees and offer a group health plan. For-profit and nonprofit companies, as well as federal employers, are covered by COBRA provisions.

Qualifying Events

• Employees are covered by COBRA and can continue to receive health benefits if they lose their coverage as a result of a qualifying event. Such events include voluntary or involuntary termination of employment for any reason except gross misconduct. In other words, you can access COBRA coverage if you quit your job.

  If your employer offers health care benefits only to employees who work more than a certain number of hours per week or month and you lose such benefits as a result of a drop in your work hours, you also are eligible for COBRA coverage.

Qualifying Individuals

• In addition to the employee who loses health benefits, his or her spouse and children can be eligible for COBRA benefits if they were covered by the employer's health plan prior to the qualifying event. The employee and his dependents are covered for 18 months following the qualifying event. If the employee is disabled within the first two months of COBRA coverage, the eligibility period increases to 29 months. If the spouse or children qualify for COBRA coverage as a result of the employee's death or due to divorce, they are covered by COBRA for 36 months.

Affordability

• While COBRA coverage will still save the qualifying individuals a significant amount of money, most employees and their dependents will have to pay more for health care insurance following the qualifying event. Many employers offer subsidized plans where they pay a portion of the insurance premiums. Under COBRA coverage, they do not have an obligation to continue such subsidies, which usually means former workers and their families will pay the entire bill. This can result in a substantial increase in health care spending and can be particularly burdensome when the employee has lost his regular job.

  However, such coverage is still cheaper than a comparable plan purchased in the open market. Since employers buy insurance for a large number of employees they get far better prices than individuals can.