Consolidated Omnibus Budget Reconciliation Act (COBRA)

Throughout a career, workers will face multiple life events, job changes or even job losses. A law enacted in 1986 helps workers and their families keep their group health coverage during times of voluntary or involuntary job loss, reduction in the hours worked, transition between jobs and in certain other cases.

The law — the Consolidated Omnibus Budget Reconciliation Act (COBRA) — gives workers who lose their health benefits the right to choose to continue group health benefits provided by the plan under certain circumstances.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

The law generally covers group health plans maintained by employers with 20 or more employees in the prior year. It applies to plans in the private sector and those sponsored by state and local governments. Provisions of COBRA covering state and local government plans are administered by the Department of Health and Human Services.

Several events that can cause workers and their family members to lose group health coverage may result in the right to COBRA coverage. These include:

• Voluntary or involuntary termination of the covered employee’s employment for reasons other than gross misconduct
• Reduced hours of work for the covered employee
• Covered employee becoming entitled to Medicare
• Divorce or legal separation of a covered employee
• Death of a covered employee
• Loss of status as a dependent child under plan rules

Under COBRA, the employee or family member may qualify to keep their group health plan benefits for a set period of time, depending on the reason for losing the health coverage. The following represents some basic information on periods of continuation coverage:

	Qualified Beneficiary	Qualifying Event Period of Coverage
Employee Spouse Dependent child	TerminationReduced hours	18 months *
Spouse Dependent child	Entitled to Medicare Divorce or legal separation Death of covered employee	36 months
Dependent child	Loss of dependent child status	36 months

*This 18-month period may be extended for all qualified beneficiaries if certain conditions are met in cases where a qualified beneficiary is determined to be disabled for purposes of COBRA.

However, COBRA also provides that your continuation coverage may be cut short in certain cases.

Source: http://www.dol.gov/ebsa/newsroom/fscobra.html