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Consolidated Omnibus Budget Reconciliation Act
Human Resources » Industrial Law & Discipline

Chrm Message From: abhijeet_rawat Total Posts: 27 Join Date: 06/12/2006
Rank: Executive Post Date: 10/02/2007 22:47:35 Points: 135 Location: United States

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.

Abhijeet Rawat

Chrm Message From: Jim Watson Total Posts: 27 Join Date: 06/12/2006  
Rank: Executive Post Date: 12/02/2007 00:11:07 Points: 135 Location: United States

I started a job last week. The company insurance will start as of March 1 --- 10 weeks away! I am trying to stay at this job until then so that I can quit and get COBRA. Right now I am paying about $600 out of my own pocket for an individual policy. If I stay here and get on their plan and then go on COBRA, the monthly  premium will be cut in half for me. That can help me as I look for another job.

Can anyone out there tell me a time frame to get COBRA? Do I have to be in the company plan for so many days or weeks before I apply (and quit). I was thinking of staying at the firm until March 1 (when the insurance kicks in) and then quitting 2 weeks later. Would I still be able to get COBRA?

Jim Watson

Chrm Message From: shaolin Total Posts: 28 Join Date: 06/12/2006  
Rank: Executive Post Date: 12/02/2007 00:13:10 Points: 140 Location: United States

Dear Jim,

Once you're eligible for benefits, you should be eligible to make COBRA payments if you quit. I believe you have 60 days from your termination date to elect COBRA too, so you can play it out to see if you actually need it before your new insurance kicks in. I would verify this with your HR person or look in the book they should have given you about your benefits.

Years ago I was inbetween jobs and I needed insurance to cover me until my new benefits kicked in. Believe it or not I got a cheap policy from State Farm that covered me for 6 months. You might want to check something like that out too.

Good luck.

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