What is COBRA?What is COBRA? It is a law that was created to address a potential shortfall in insurance coverage for individuals with families that become unemployed. What is COBRA? In 1986, Congress passed a law called the Consolidated Omnibus Budget Reconciliation Act that contained provisions that provided for the continuation of health insurance in cases where it might otherwise be terminated. This act is commonly known as COBRA. It applies to employers who have more than 20 employees and maintain a group insurance plan of some kind for them. Get California Health Insurance Plan Quotes In order to be eligible for COBRA, an employee must be a member of the employer’s group health insurance plan. If he loses his employment status either voluntarily or not, he has the right to continue his coverage under the employers plan. This would apply as well if he faces a reduction in hours that would cause him to lose coverage. The only case where a terminated employee would not be eligible for COBRA coverage is if his cause of termination is gross misconduct. It is the responsibility of the employer to notify the administrator of the group plan of the change in the employee’s status. The administrator will then notify the employee who must accept or decline the coverage within a set period of time. The cost of the insurance must be borne entirely by the employee. This usually results in considerably higher premium payments because in most cases the employer will have been paying a large percentage of the cost. In most cases, the continued coverage will still be less expensive than private health insurance, and no qualification exams must be taken as the group coverage is simply extended with no changes. Get California Health Insurance Plan Quotes COBRA also applies to dependents of employees. If they are covered under a family provision of an employee’s group coverage, they can also continue their coverage in the case of the termination of the employee. Once again, gross misconduct is the only exception. Dependents are also eligible for continued coverage when the employee ceases his participation because he has become eligible for Medicare or retires. Other life changes such as divorce, separation, or death of the covered employee also make the dependents eligible for COBRA continuation of coverage. These life changes such as termination of employment, divorce, or death all have serious financial impacts on people in addition to the emotional impact. COBRA has removed at least one of the problems from this equation by making sure that health insurance coverage is available for the individual and his dependents, at least during the transitional period. Employees covered under group plans that make them eligible for COBRA should be aware of the necessary procedures in the event that they are ever needed. << Back to Health Insurance Information
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