COBRA Health Insurance Premium Subsidy (65%) for continuation of health benefits if you involuntarily lost your job or had a reduction in hours between Sept. 1, 2008 and May 31, 2010
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) gives workers who lose their jobs, and thus their health benefits, the right to purchase group health coverage provided by the plan under certain circumstances.
If your past employer continues to offer a group health plan, you and your family can retain group health coverage for up to 18 months by paying the group rates. The COBRA premium may be higher than you were paying while employed, but generally the cost is lower than that for private, individual health insurance coverage.
The administrator or your employer's health plan must notify you of your right to elect COBRA. Coverage must be elected within 60 days; otherwise, all rights to COBRA benefits may be lost.
The COBRA law generally applies to group health plans maintained by employers with 20 or more employees in the prior year. The law does not, however, apply to plans sponsored by the governments of the District of Columbia or any territory or possession of the United States, certain church-related organizations or the federal government. (The Federal Employees Health Benefit Program is subject to generally similar, although not parallel, temporary continuation of coverage provisions under the Federal Employees Health Benefits Amendments Act of 1988.)
COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events. These elements will determine the period of coverage.
Plans: Group health plans maintained by employers with 20 or more employees on more than 50% of their typical business days in the previous calendar year are subject to COBRA.
Qualified Beneficiaries: A qualified beneficiary generally is an individual covered by a group health plan on the day before a qualifying event. Depending upon the event, the following individuals may be qualified beneficiaries: a "covered employee" (a term that includes active employees, terminated employees and retirees); a covered employee's spouse and dependent children; any child born to or placed for adoption with a covered employee during the period of COBRA coverage; agents; self-employed individuals; independent contractors and their employees; directors; political appointees; and elected officials.
Qualifying Events: "Qualifying Events" are certain events listed in the COBRA law that would cause an individual to lose health coverage. The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health coverage to them under COBRA. (Click on "Standard Periods of Coverage," "Extended Periods of Coverage," and "Contracted Periods of Coverage" on the left navigation bar.) A plan, at its discretion, may provide longer periods of continuation coverage.
The qualifying events for covered employees are:
The qualifying events for spouses are:
The qualifying events for dependent children are the same as for the spouse with one addition:
Health care benefits provided under the terms of a group health plan that are available to COBRA beneficiaries may include:
Life insurance, however, is not covered under COBRA.
Group health plans must offer coverage to qualified beneficiaries that is identical to that available to similarly situated individuals who are not receiving COBRA coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation coverage). For example, a qualified beneficiary may have had medical, hospitalization, dental, vision and prescription benefits under a single or multiple plans maintained by the employer on the day preceding the qualifying event. That qualified beneficiary may elect to continue all benefits or choose to continue only certain benefits (if active employees are permitted to select specific benefits and decline other benefits under the plan or plans).
A change in the benefits under the plan for active employees will also apply to qualified beneficiaries. Qualified beneficiaries must be allowed to make the same choices given to non-COBRA enrollees under the plan, such as during periods of open enrollment by the plan. COBRA beneficiaries remain subject to the rules of the plan and therefore are subject to catastrophic and other benefit limits to the same extent as non-COBRA plan enrollees.
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) establishes required periods of coverage for continuation health benefits. COBRA beneficiaries generally are eligible for group coverage during a maximum period of 18 months for a qualifying event of employment termination or reduction of employment hours. Other qualifying events may entitle a spouse and dependent children to a total of 36 months of COBRA coverage.
A plan may provide longer periods of coverage than those required by COBRA. Also, events that occur during a period of COBRA coverage may extend or contract the coverage period. Other qualifying events may entitle a spouse and dependent children to a total of 36 months of COBRA coverage.
Qualified beneficiaries must be given an election period of at least 60 days during which each qualified beneficiary may choose whether to elect COBRA coverage. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided. COBRA coverage is retroactive if elected and paid for by the qualified beneficiary.
Each qualified beneficiary may independently elect COBRA coverage. For instance, if an employee retires and enrolls in an employer-sponsored retiree plan that does not cover dependents, the retiree's spouse, and any dependent children, may elect COBRA (for a period of 18-months). A covered employee or the covered employee's spouse may elect COBRA coverage on behalf of all other qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child.
If a qualified beneficiary waives COBRA coverage during the election period, he or she may revoke the waiver of coverage before the end of the election period. Revocation of the waiver is an election of COBRA continuation coverage. However, in that case, the plan need only provide continuation coverage beginning on the date the waiver is revoked rather than from the coverage loss date.
Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. COBRA coverage may be less expensive, though, than individual health coverage.
COBRA premiums may be increased if the costs to the plan increase for similarly situated non-COBRA beneficiaries, but, for COBRA purposes, such premiums generally must be fixed in advance of each 12-month premium cycle. The plan must allow you to pay premiums on a monthly basis, if you wish, but may give you the option to make payments at other intervals (for example, weekly or quarterly).
You (or someone on your behalf) must make the initial premium payment within 45 days after the date of your COBRA election; the payment generally must cover the period from the coverage loss date through the month in which the initial payment is made. However, if you only need COBRA coverage for a short period of time, such as one or two months, you can pay only for those months from the coverage loss date.
Source: U.S. Dept. of Health & Human Services