Legal Words of Wisdom: COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA, passed in 1986) gives workers and their families who lose their health benefits the right to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death (for spouses and children of the deceased), divorce (former spouses), and other life events.
COBRA generally covers health plans sponsored by employers with 20 or more employees in the prior year. To qualify for COBRA, a person must be covered by the group’s health plan the day before the qualifying event (retirement, job loss, death, etc.). Of note, federal employees are not covered by COBRA, but are covered by a similar law and can contact the personnel office serving their agency for more information.
To receive COBRA benefits, you must notify the plan administrator within 60 days of the "qualifying event". If you do not know who is the plan administrator, contact your human resources department. You have 45 days after electing to continue coverage to pay the first premium on your plan. This premium covers the entire time since your qualifying event (last day of employment, retirement, etc.) and provides uninterrupted coverage.
The American Recovery and Reinvestment Act of 2009 (ARRA) provides discounted rates and another opportunity to elect COBRA coverage if you previously declined if your qualifying event was involuntary termination of employment that occurred on or after September 1, 2008 through February 16, 2009. For more information visit the COBRA Premium Reduction FAQs or call 1.866.444.3272 to speak to a COBRA Benefits Advisor.
COBRA coverage generally lasts for 18 months, but a plan can provide longer coverage. The coverage must be identical to the coverage employees not on COBRA receive. You will likely be required to pay the entire premium for coverage, which can be up to 102 percent of the cost to the plan. While this sounds expensive, this group rate is almost always much less than you would pay for an individual plan.
Disability can extend the 18 month period of COBRA coverage, though this coverage can cost up to 150% of the premium cost. Some plans offer the option to continue the plan as an individual policy at the end of the coverage period. This may be with lower coverage and higher costs.
Your health plan is required to send you a notice about electing COBRA benefits within 14 days of being notified of the qualifying event. If you do not receive information, you should contact your human resources department directly.