The federal law known as the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows workers to remain covered by their former employers' health insurance plans for up to 18 months after they leave their jobs, although they have to pay the full cost of the premiums themselves. If an employer's health plan is covered by COBRA, then in most cases, that employer has to give departing employees the option of continuing their coverage.
Covered Plans
Whether a health plan is covered by COBRA depends on the size of the employer's workforce. If an employer had at least 20 employees for the majority of its business days in the previous calendar year, then any group health insurance plan it offers its employees is subject to COBRA. Employers covered under COBRA are required to tell workers when they leave their jobs that they can continue their coverage.
Covered Employees
To qualify for coverage under COBRA, a worker has to have been participating in the employer's health plan before leaving the company. In other words, if you're working for a company and you aren't enrolled in its insurance plan, your employer doesn't have to offer you COBRA when you leave. COBRA coverage extends not only to the employee but also to other members of that worker's family who were covered by the plan. That means that if your spouse and children were on your plan while you worked at the company, they'd be covered by COBRA, too. But if they weren't covered, you cannot add them to your coverage after you leave. There's one exception: If you have a new baby or adopt a child while you're under COBRA, that child will be covered.
Reasons for Leaving
Employers covered by COBRA must offer continued coverage to anyone who leaves the company for any reason unless that person was fired for "gross misconduct." The law doesn't define gross misconduct, but the legal advice website Nolo says it generally covers illegal or dangerous conduct and deliberate violations of workplace standards. Simply being a bad worker -- making mistakes, being inefficient, showing bad judgment -- doesn't qualify as gross misconduct.
Other Situations
Though COBRA usually applies to workers who are leaving a job, employers must also offer continued coverage in some other circumstances. For example, if a covered employee dies or retires, her family can continue coverage under COBRA. Same thing if the employee gets kicked off the company health plan because she now qualifies for Medicare. If a worker gets divorced, her ex-spouse can continue her coverage. And if a worker's child reaches the age where the child is no longer eligible under family coverage, that child also can get COBRA coverage.
Tags: covered COBRA, health plan, under COBRA, gross misconduct, COBRA coverage, continue coverage, continued coverage
