The Consolidated Omnibus Reconciliation Act (COBRA), passed in 1986, helps employees and their families continue their group health insurance coverage after leaving a job. The coverage is temporary, and the employee must often cover the entire cost, but it can help ease the transition when circumstances create a situation where group health coverage might otherwise end.
In order to receive COBRA benefits, you must be a qualified beneficiary who has experienced a qualifying event. A qualified beneficiary is a person who is enrolled in a group health plan covered by COBRA the day before a qualifying event occurred. A qualified beneficiary may be:
Qualifying events depend on the qualified beneficiary. A qualifying event for an employee, spouse or dependent child includes:
Qualifying events for spouses and dependent children include:
COBRA covers all group plans, including dental, vision and prescription drug plans, but not life insurance or disability benefits plans, offered by employers with at least 20 employees. Employers may be private sector or state and local government agencies. The employee count includes part-time employees, each of which counts as a fraction of an employee, based on the number of hours worked. Individuals with health coverage offered by the federal government or church-affiliated employers are not eligible for COBRA, although federal employees are covered under another law, which is similar.
If you elect COBRA coverage, you may be required to pay the full cost of coverage, which is usually more than you had been paying because employers often subsidize the cost. You may also be required to pay a 2% administrative charge. Even so, COBRA coverage is usually much less expensive then trying to buy individual health coverage on the open market. If you stop paying your premiums, your coverage can be cancelled.
Your health plan should provide written rules for how to obtain COBRA benefits, but in general:
Length of coverage depends on the event.
If your claim is denied, you must receive written notice, along with a reason for the denial, procedures for appealing, and information on any additional documentation required to support your claim. Note that it is illegal for healthcare plans to discriminate against pregnant employees, so pregnancy alone is not a valid reason to deny a claim. COBRA continuation coverage is not appropriate for everyone, so weigh your options carefully before making a final decision.