COBRA, Consolidated Omnibus Budget Reconciliation Act, is a landmark act passed by the Congress in 1986 as part of health benefit provisions. The law is an amendment of the Internal Revenue Code, the Employee Retirement Income Security Act (ERISA), and the Public Health Service Act which aim to provide continued group health coverage which would otherwise be terminated.

COBRA has provisions that give a certain category of retirees, former employees, spouses as well as dependent children the right to continued health coverage on a temporary basis at group coverage rates. However, this coverage is available only in specific circumstances. COBRA participants have group health coverage that is more expensive than that for active employees. This is because a part of the premium must have been paid by the employer. But is usually is less expensive than individual health coverage.

This law usually covers group health insurance plans that are maintained by employers having 20 or more employees in the last fiscal year. The law applies to all plans in the private sector as well as those that are sponsored by the local and state governments. This law, however, does not apply to those plans that are sponsored by some church- related organizations as well as the Federal government.

ERISA’s welfare plans monitor the group health plans that are sponsored by the private sector. These plans are subject to the requirements of ERISA to report and fiduciary standards, disclosure, and enforcement. ERISA does not establish either benefit eligibility or minimum standards for the welfare plans nor does it mandate the level or type of benefits that are offered to the participants of the plan. It does, nevertheless, ask that the plans have rules that outline how benefits are entitled to the workers.

A group health plan under COBRA is generally defined as a plan providing for medical benefits to the employees and the dependents through insurance or other institutions like health maintenance organization, trust, reimbursement, self-funded pay-as-you-go basis or a combination of the institutions. Medical benefits that are provided under the plan terms and accessible to the beneficiaries of COBRA are:

• Outpatient and Inpatient hospital care
• Surgery
• Physician care
• Prescription drugs
• Other medical benefits like vision and dental care

Life insurance is not covered by COBRA.

The conditions under which COBRA must be considered are when a continual and guaranteed coverage can be had but at a greater cost, there is a recent history of health problems, a person has to take expensive medications, private insurance has been declined recently, a person has met with an accident within 60 days of endowment, a lady is pregnant or wishes to bear a child, and when a person starts a new job where a health plan is not offered by the employer.

COBRA is an alternative when there are no pre-existing conditions, continual coverage is needed at lower cost, there are no health problems, and a person has not received any advice from the medical professionals about any medication or surgical procedure in the near future.