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Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, is a law passed by the U.S. Congress, that mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment. COBRA includes amendments to the Employee Retirement Income Security Act of 1974 (ERISA).
Since its original enactment, COBRA has been modified numerous times by Congress. The Act provides terminated employees or those who lose coverage because of reduced work hours the ability to purchase group health coverage for them selves and their families for limited periods of time, ranging from 18 to 36 months. The law specifies rates, coverage qualifying events, eligible individuals, notification requirements and payment terms.
Q: As an employer, am I covered by COBRA?
A: 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 government. It does not apply to plans sponsored by the Federal government and certain church-related organizations.
Q: What are qualifying events under COBRA?
A: Qualifying events are defined for employees, spouses of employees, and dependent children of employees. There are two types of qualifying events for employees: 1) voluntary or involuntary termination of employment for reasons other than "gross misconduct" 2) reduction in the number of hours of employment. There are five types of qualifying events for spouses: 1) termination of the covered employee's employment for any reason other than "gross misconduct" 2) reduction in the hours worked by the covered employee 3) covered employee's becoming entitled to Medicare 4) divorce or legal separation of the covered employee 5) death of the covered employee. The types of qualifying events for dependent children are the same as for the spouse with one addition, loss of "dependent child" status under the plan rules.
Q: As an employer, how long must I provide COBRA benefits?
A: The length of coverage is dependent on the qualifying event. If the qualifying event is termination or reduction in hours of employment then the coverage must be provided for 18 months. If the qualifying event is the employee becoming entitled to Medicare, divorce/legal separation, death of the covered employee, or the loss of "dependent child" status, then the coverage must be provided for 36 months. In the case of individuals who qualify for Social Security disability benefits, special rules apply. Regards
Abhijeet Rawat |
