Guidelines for Cobra Coverage

The 1986 Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, requires employers with group health plans to offer to temporarily continue health care benefits to plan members who lose eligibility to participate in the plan after a job loss, divorce or other specific event. Under the law, the covered employee, their spouse, their former spouse and their dependent children can continue to receive plan benefits at their own expense. The U.S. Department of Labor provides specific guidelines on the type of care, benefits, premium costs, events that make you eligible for COBRA as well as the length of time you may remain a COBRA participant.

Type of Care and Benefits

• COBRA defines a group health plan as any arrangement that an employer establishes or maintains to provide its employees or their families with medical care. Medical care includes inpatient and outpatient hospital care, physician care, surgery, prescription drugs, dental and vision care. The law requires health plans to offer COBRA participants the same benefits, choices and services as the plans made available to active employees and their families with similar circumstances.

Coverage Options, Co-Payments and Claims

• As a COBRA participant, you should generally receive the same coverage that you had as a plan member, and you can choose coverage options during the health plan's open enrollment season. However, you must still comply with the health plan's rules on co-payments, deductibles and coverage limits. As a COBRA participant, you also must follow the health plan's procedures for filing benefit claims and appealing any claims denials.

Premium Cost

• As an employee benefit, your employer likely paid a part of the health care premium for you and your dependents. As a COBRA participant, you must pay the total premium for the plan benefits. The plan can charge you an additional 2 percent to cover administrative costs. However, if you became eligible for COBRA coverage after your or a family member's involuntary termination from employment between Sept. 1, 2008 through May 31, 2010, you may be eligible for a reduced premium for your COBRA coverage.

Qualifying Events

• The law gives specific job-related and personal events that make you eligible for COBRA continuation benefits. Employees who retire, resign or are terminated can elect COBRA coverage. If your employer reduces your work schedule causing you to lose eligibility to participate in the group health plan, you can elect to continue benefits under COBRA. Your spouse and dependent children can continue receiving benefits upon your loss of eligibility. If your child reaches an age the plan no longer considers a dependent, he can elect COBRA. Upon divorce, your former spouse can retain health care benefits from the plan as a COBRA beneficiary.

Length of Coverage

• A COBRA participant can receive plan benefits a minimum of 18 and a maximum of 36 months, depending on the event that causes loss of health plan eligibility. If you lose coverage after you are laid-off from work or your employer reduces your work hours, COBRA entitles you to 18 months of continued health benefits. However, if you become disabled while participating in COBRA you can extend your coverage to 29 months. For a spouse or dependent, the time period for participation can last 36 months if a second qualifying event occurs, such as the death of, or divorce from, a covered employee.