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Lost Your Job? COBRA Lets You Keep Your Health Insurance

What You Need to Know About COBRA


COBRA, or the Consolidated Omnibus Budget Reconciliation Act, was passed in 1986. COBRA contains health benefit provisions that protect one's group health insurance coverage when employment is terminated or when one loses his or her coverage for another reason. Other reasons may include divorce from a covered employee, death of a covered employee, or when the child of a covered employee loses "dependent child" status.

If you are facing the loss of your group health insurance coverage it is important that you know about COBRA and how it can protect you. Group health insurance is one of the most valuable components of your compensation package. Many employers pay the entire premium. Even if an employee must pay a portion of the premium or the entire premium, it is still much less expensive than paying for an individual health insurance policy. When your job is terminated, whether you are laid off or quit, you shouldn't have to go without health insurance because you can't afford an individual policy. That is where COBRA comes in. It allows you to continue to participate in your employer's group health insurance plan by paying for your policy on your own. Here are answers to some questions you may have. The information provided here is general in nature. The end of the article tells you where to go for more information.

What Group Plans Are Subject to COBRA?

  • Group plans maintained by employers with 20 or more employees on more than 50 of it's typical business in the prior year are subject to COBRA.

  • Group plans maintained by private sector employees and state and local governments are subject to COBRA.

  • The Federal Government's group plans and some church-related organization's group plans aren't subject to COBRA.

Who Is Considered a Qualified Beneficiary?

  • An individual who was covered by a group health plan on the day before a qualifying event is considered a qualified beneficiary.

  • The employee, his or her spouse, an employee's dependent child, or any child adopted by a covered employee is a qualified beneficiary

  • Agents, independent contractors, and directors who participate in a group plan may, under some circumstances, be considered qualified beneficiaries.

What Are Qualifying Events?

A qualifying event is one that would cause a qualified beneficiary to lose group health coverage.

For employees a qualifying event could be:

  • Voluntary or involuntary termination for a reason other than gross misconduct

  • Reduction in number of hours

For a covered employee's spouse a qualifying event could be the following:

  • Voluntary or involuntary termination of the covered employee for a reason other than gross misconduct

  • Reduction of the covered employee's number of hours

  • The covered employee becomes entitled to Medicare

  • Divorce or legal separation from the covered employee

  • Death of the covered employee

For a covered employee's dependent children a qualifying event would be the same as those listed for a spouse with the addition of the loss of "dependent child" status under the rules of a particular plan.

More About COBRA...
Notification and Election, Covered Benefits
Duration and Cost of COBRA Coverage, Where to Get More Information

Disclaimer: Please note that the information on this website is for guidance, ideas and assistance only. Dawn Rosenberg McKay makes every effort to offer accurate advice and information on this site. She is not, however, an attorney, and the content on the site is not to be construed as legal advice. Employment laws and regulations vary by location so check government resources or legal counsel when in doubt about your particular situation.

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