COBRA

Question 1

What does COBRA stand for?

Answer 1

The Consolidated Omnibus Budget Reconciliation Act of 1985.

Question 2

Purpose of COBRA

Answer 2

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.

Question 3

COBRA Qualifications

(detailed)

Answer 3

See PDF file downloaded from DOL website.

Question 4

COBRA Continued Coverage for Former Employees

Answer 4

• Employment is terminated (other than gross misconduct): 18 mons of continued coverage (or up to 29 mons if disabled)
• Employee’s hours are reduced (resulting in termination from the plan): 18 mons of continued coverage (or up to 29 mons if disabled)
• Employee dies: 36 mons of continued coverage for dependents
• Dependent child no longer qualifies as “dependent child” under the plan: 36 mons of continued coverage
• Employee becomes eligible for Medicare: 36 mons of continued coverage
• Employee divorces or legally separates: 36 mons of continued coverage for former spouse

Question 5

Who pays for the benefits under COBRA

Answer 5

• The terminated employee or surviving dependents are responsible for paying the premium, which may be up to 102% of the premium
• The additional 2% is allowed to cover the insurer’s administrative expenses
• The schedule of benefits will be the same during the continuation period as under the group plan