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COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) allows employees to continue their health insurance coverage at their own expense for a period of time after their employment ends. For most employees ceasing work for health reasons, the period of time to which benefits may be extended ranges from 18 to 36 months.
Qualifying events determine how long COBRA coverage will be extended, such as:
- Termination of employment—18 months of coverage
- Disability—18 to 29 months of coverage (coinciding with the Medicare waiting period)
- Reduction of work hours with loss of benefits—18 months of coverage
- Death of covered employee—coverage can be continued indefinitely for an eligible spouse, or until age 23 or marriage for dependents
- Divorce or legal separation from covered employee—36 months of coverage
Medical benefits provided under the terms of the plan and available to COBRA beneficiaries may include:
- Inpatient and outpatient hospital care
- Physician care
- Surgery and other major medical benefits
- Prescription drugs
- Any other medical benefits, such as dental and vision care
If an employee is entitled to COBRA benefits, the employer must give the employee notice of his/her right to continue benefits provided by the plan. The employee must reply within 60 days to accept coverage or forfeit his/her right to continued coverage.
Note: Life insurance is not a benefit that must be offered to individuals for purposes of health continuation coverage.
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