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The Meaning of COBRA

COBRA is the common acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985, which made a great many miscellaneous adjustments to federal law but which is most famous for rules it put in place regarding employer-provided health insurance.

  1. History

    • Ronald Reagan signed COBRA in 1986 (despite its name containing "1985".) It contains twenty Titles, or sections, which range from reform to tobacco subsidies to arcane adjustments to the financial responsibilities of the U.S. Post Office. In March of 2010, shortly before the passage of the enormous Patient Protection and Affordable Care Act, Barack Obama renewed COBRA's health-care legislation for a thirty-day period pending a resolution of the ongoing debate over the PPACA, which ended up not changing COBRA significantly at all.

    Health Care

    • Titles IX through XI of COBRA all concern health care, and it's these Titles that people usually mean when they refer to "COBRA rights" or "COBRA benefits." These dictate that when a person receiving health insurance from his employer, or from the employer of a spouse or parent, loses that insurance, he may be entitled to continued coverage under the same plan. To continue receiving insurance under COBRA, a person must have lost employment insurance as the result of a "qualifying event."

    Qualifying Events

    • Qualifying events include termination of employment (for reasons other than gross misconduct), a decrease in working hours, divorce or separation from a spouse under whose plan you were covered, loss of "dependent child" status in relation to a parent under whose plan you were covered and several others (see Resources for a link to a larger list).

    Qualifying Employers

    • Aside from the circumstances that qualify an individual employee or relative for COBRA benefits, the employer itself must also qualify--it must have installed a group health plan and employed at least 20 people for at least half of its business days in the previous calendar year. Part-time employees are counted as fractions of a single employee, with the size of the fraction contingent on the number of hours each part-time employee worked.

    The Future

    • The relevant Titles of COBRA were among those pieces of legislation that went unchanged under President Obama's large-scale health care bill in 2010. Though the bill overhauls a great many aspects of American health care, COBRA's provisions regarding employee health plans remain in place.

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