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Can You Get COBRA if a Business Is Sold & You Are Laid Off?

COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act. COBRA was enacted in 1986 to offer employees the right to choose to temporarily keep group health insurance benefits when they leave or lose a job. Employees qualify for COBRA coverage as long as the reason for the job loss is a "qualifying event."

  1. Qualifying Event

    • A qualifying event relates to the reason for the job loss or job termination. According to Section K of COBRA, the qualifying events are the employee quits, get laid off, is fired or any reason other than gross misconduct. A company might go out of business, file bankruptcy or even be sold, but the only non-qualifying event for COBRA coverage is employee gross misconduct.

    Function

    • With most group plans, the employer pays all or a percentage of the group insurance premiums for all employees. COBRA enables laid-off employees to maintain the group insurance, but the employee must pay the complete premium. Employees can enjoy this benefit for up to 18 months if they do not find another job within this period. Disabled individuals can get up to 29 months of coverage.

    Significance

    • Prior to COBRA, when employees left a company, they lost their health insurance. For this reason, COBRA provides a significant transitional bridge for people who are laid off as well as for people who are unhappy in their jobs and quit in lieu of finding another one.

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