The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows eligible employees who leave their jobs to continue receiving group health care benefits. Federal law requires employers to offer COBRA benefits to all eligible employees who have left their jobs due to a qualifying event. Not all employees are eligible to receive COBRA benefits.
COBRA Definition
COBRA is a federal law that allows ex-employees and their families to continue receiving benefits from their employer's group health insurance plan. COBRA beneficiaries must pay the entire health insurance premium, including the employer-sponsored portion of the premium, plus an administrative fee of up to 2 percent. Coverage lasts up to 18 months but can be extended for persons with disabilities. In order to be eligible for COBRA benefits, employees must have lost their job due to a qualifying event.
Qualifying Event
A qualifying event is an event that would generally cause a person to lose their group health insurance benefits. Qualifying events include transitioning between jobs, reduction in hours, death of a spouse, divorce, resigning from a job or being fired for anything other than gross misconduct. Employees not eligible for COBRA due to gross misconduct have generally been fired for illegal or dangerous acts, such as stealing from an employer or divulging trade secrets.
Employer Responsibility
Every employer must extend health insurance benefits to all employees who meet certain conditions. In addition to employees becoming eligible for a qualifying event, employees must have been enrolled in a group health insurance plan that had 20 or more enrollees in the prior year. If an employer-sponsored plan did not have 20 or more enrolled members, then the employer does not have to offer COBRA benefits under federal law.
State Law
Although all employers must adhere to the guidelines, some states have enacted a "mini COBRA" law to extend COBRA benefits to more workers. For example, in the state of Iowa, employers are required to offer COBRA coverage to employees who were enrolled in plans with two to 19 members.
Tags: COBRA benefits, health insurance, group health, qualifying event, group health insurance
