The Consolidated Omnibus Budget Reconciliation Act

What is COBRA?

A Federal Law – in 1986 Congress passed the Consolidated Omnibus Budget Reconciliation Act to require most group health plans to offer temporary continuation of group health benefits to employees and their eligible dependents, under certain circumstances, beyond the date they would no longer be eligible for the health benefits.

Who is eligible for COBRA?
Employees and their qualifying dependents who loose their group medical coverage due to termination of employment, reduction in hours, divorce, death, dependent reaching limiting age, Medicare entitlement or retirement.

When does coverage under COBRA begin?
Coverage begins on the date your coverage would otherwise have ended because of the qualifying event.

How long does coverage under COBRA last?
You may elect COBRA coverage for up to 18 months if you lost coverage due to termination of employment for any reason, other than gross misconduct, or if your work hours are reduced below the minimum eligibility requirements.

You may elect COBRA coverage for up to 29 months if you are considered disabled under Title II or Title XVI of the Social Security Act (within 60 days of the qualifying event) when coverage is lost.

COBRA coverage may be elected for up to 36 months by your covered children who have reached the limiting age or who no longer qualify as an eligible dependent under the group medical policy; by surviving covered spouse/children if you die, by a divorced spouse and/or dependent children whose coverage is affected due to the divorce. Newborns or adopted children may be added during a period of COBRA coverage but this event does not necessarily extend the original COBRA period.

When must I apply for COBRA?
Within 60 days of the date a qualifying event occurs, or within 60 days of the date you are notified of your rights to elect COBRA coverage, whichever is later.

When does COBRA coverage end?
COBRA coverage ends when any of the following events occur:
  • At the end of the applicable 18, 29 or 36 month eligibility period
  • If you or your dependents stop paying the required premium
  • If you or your dependents become eligible for Medicare
  • If you or your dependents become enrolled in another medical plan by reason of employment or marriage and satisfy the pre-existing limitations imposed by the new medical plan.
  • If you or your dependents are no longer considered disabled for Social Security purposes.
  • If all health plans provided by your employer are discontinued.

How much does COBRA coverage cost?
If you elect COBRA coverage, the employer may charge no more than 102% of the group rate (for insured plans) and no more than 102% of the previous year’s cost for self-insured plans. Payments must be made timely (within 30 days of the due date)

How do I apply for COBRA?
It is your responsibility to notify your employer within 30 days in the event of divorce, legal separation, and eligibility for Medicare or any change of status of your dependents.

When an employee dies, is terminated or their work hours are reduced, the employer has 30 days to notify the Plan Administrator. Within 14 days of receiving notice the Plan Administrator must notify the employee and dependents of their COBRA continuation rights. The employee and/or their dependents then have 60 days to elect COBRA.

For questions, please contact Lori Heffington at (423) 498-7086.

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