Employees who obtain group health insurance through their employer can lose their coverage when their employment situation changes. Similarly, their families can also lose coverage if the employment or family situation changes. COBRA continuation coverage provides employees and families who are no longer eligible for group health insurance due to a qualifying event with temporary health insurance coverage.
The Consolidated Omnibus Budget Reconciliation Act, which was passed in 1986, contained health benefit provisions that are commonly called COBRA continuation coverage. These benefits extend group health insurance that would be terminated due to a qualifying event, ensuring that employees and their families aren’t without health coverage when they experience a qualifying event that would otherwise cancel their group health insurance benefits obtained through their employer.
Several events that could affect an employee’s or family member’s health insurance are covered under COBRA. The list of qualifying events includes:
How long COBRA coverage lasts depends on what qualifying event triggered the coverage. If an employee is terminated or has their hours reduced, COBRA coverage can last for up to 18 months. For other events, it may last up to 36 months. In both cases, COBRA coverage typically begins on the day of the qualifying event, and it will be terminated early if a potential beneficiary doesn’t pay the coverage premiums.
Businesses that have at least 20 employees are typically required to provide COBRA coverage, and there are usually legal requirements to notify employees of COBRA coverage if it’s provided.
COBRA coverage premiums are usually paid for by the person receiving the coverage (i.e. an employee, an employee’s family, a former spouse, or a former dependent). There are federal requirements about how much the premiums can be and how they can be billed, but the responsibility for paying for coverage typically falls to the employee or their family.
Several organizations formally oversee different aspects of COBRA coverage:
Businesses can, of course, contact the federal agencies that oversee COBRA coverage to learn more about it. Reaching multiple agencies can take a significant amount of time, though.
It’s often easier for businesses to talk with the firm that helps them set up a group health insurance plan. Because COBRA coverage is essentially a continuation of group health insurance benefits under certain, qualifying circumstances, firms that help businesses set up group health plans are often well versed in and able to assist with COBRA continuation coverage.