What Is COBRA?
If you've recently lost your job, you could be eligible for
the continuation of your health insurance benefits under the
federal law known as COBRA (short for the Consolidated Omnibus
Budget Reconciliation Act of 1985).
What does COBRA do?
It provides the right to a temporary continuation of health
coverage at group rates for qualified workers and their dependents
for 18 months if there is a lost of coverage due to certain
circumstances, such as unemployment, divorce, or death. A
beneficiary can receive an additional 36 months of coverage
if they are faced with a second qualifying event during the
initial period of coverage. However, the person getting coverage
is required to pay for the premium on their own.
The same does not apply to individual plans that you buy on
your own, rather than through work or an association. After
you lose the coverage, you won't be able to get an extension
under COBRA.
Who qualifies under COBRA?
You can qualify for COBRA benefits under any of the three
criteria:
Plan Coverage
• It is applicable to employers hiring
20 or more employees on more than 50 percent of its typical
business days in the previous calendar year.
• It takes into account both full and part-time employees.
• Each part-time employee counts as a fraction of
an employee, arrived at dividing the number of hours that
the part-time employee worked by the hours an employee must
work to be considered full time.
Qualified Beneficiaries
• An employee, the employee's spouse,
or an employee's dependent child is a qualified beneficiary,
if they were covered by a group health plan on the day before
a qualifying event.
• The same may be applicable to retired employee and
their dependents.
• Any child born to or placed for adoption with a
covered employee during the eligible period.
• Other qualified beneficiaries can be - agents, independent
contractors, and directors who participate in the group
health plan.
Qualifying Events - Qualifying
events are the events that caused you to lose your health
coverage.
• If you loss your dependent child
status according to the plan rules
• If you have quit or asked to leave the job for any
reason other than gross misconduct
• Your regular working hours have been reduced
• You qualify for Medicare
• Recently divorce or legal separation
• Passing away of the plan holder
When does COBRA coverage begin?
COBRA coverage begins on the date a qualifying event causes
you or your dependents to lose the health care coverage you
were covered by.
