What is COBRA?

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With talk of insurance and the Affordable Care Act dominating the news for the last several months, you may have heard others mention COBRA. Although it’s allows workers the ability to continue group health benefits under certain circumstances, it involves much more than that.

What is COBRA?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It gives workers and workers’ families the right to choose to continue receiving group health benefits provided by their group health plan after they have lost their health benefits. But, it only allows workers to receive them for limited periods of time, and under certain circumstances. Voluntary or involuntary job loss, a reduction in work hours, death or transitioning between jobs are all circumstances under which a worker could be eligible for COBRA.

COBRA coverage is usually more expensive than coverage for active employees, because the employer does not pay a portion of the premium. As a result, individuals may be required to pay the entire premium for up to 102% of the cost to the plan. But, prior to the passage of the Affordable Care Act, COBRA was often less expensive than individual coverage.

What events may qualify a beneficiary for COBRA coverage?

  • Voluntary or involuntary termination of employment for reasons other than gross misconduct
  • Reduced number of hours of employment
  • Covered employee’s becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

Who can I go to for questions about COBRA coverage?

The U.S. Department of Labor

The Internal Revenue Service

 

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