COBRA Insurance Rights
Getting fired or laid off from a job doesn't have to mean the end of your health insurance coverage. Read below to learn how post-employment COBRA coverage may work for you -- even when you're not working.
Under federal COBRA laws, employees who voluntarily resign, or were terminated for any reason other than "gross misconduct", may receive group health continuation coverage to help bridge the gap while in-between jobs. Since 1986, the law requires most employers to provide a temporary continuation of group health coverage that might otherwise be terminated.
Both full-time and part-time employees are eligible to receive continuing COBRA insurance coverage, subject to other eligibility requirements involving plan coverage, qualified beneficiaries, and qualifying events. For example, according to the U.S. Department of Labor, an employer must have 20 or more employees within its group health plan on more than 50 percent of a typical business day within the previous calendar year to offer COBRA coverage. In addition, the employee must have been a "qualifying beneficiary" or an individual who was covered by a group health plan prior to the discharge or termination either as an employee, an employee's spouse, or employee's dependent child. Lastly, there must have been a "qualifying event" or something that would have caused an individual to lose health coverage, such as losing a job, reduction in hours of employment, divorce, or legal separation of a covered employee.
The time period for coverage begins on the day after termination and lasts for a period of 18 months, and up to 36 months for an employee's spouse and dependent child. Although employers are responsible for making an initial payment (typically within 30 days of being notified that the employee has elected to continue coverage), the cost of COBRA insurance coverage is at the employees own expense.
COBRA insurance coverage applies to individuals who were covered under an employer's existing group health insurance plan, and applies to medical, dental, and Employee Assistance Plans or "EAPs", among other plans. For coverage to begin, employers must first notify their health plan administrator within 30 to 60 days after an employee's "qualifying event". The employee, spouse and/or dependent children must next decide whether to purchase COBRA during an election period of 60 days. Employers who fail to notify a qualifying beneficiary of his or her COBRA rights may face monetary fines and other damages.
Employers who do not offer health coverage in general or who go "out of business" are not required to offer COBRA continuing health coverage, even after a qualifying event.
Payments & Premiums
Qualifying individuals are required to make premium payments to their COBRA health plan during the coverage time period. The obligations and plan stipulations may allow for a 30-day grace period and other payment options, such as extensions, conversion plans, and disability considerations. There is also a COBRA provision that gives qualified participants a 65 percent federal subsidy for up to 15 months, subject to qualifying for the provision (for example, based on the annual income reported on a tax return).
To learn more about COBRA insurance eligibility, benefits, and other questions, see the COBRA Continuation Health Coverage FAQ or the Department of Labor. If you feel your COBRA rights were violated, or need further information concerning health plan coverage, termination, or other employment issues, speak with a knowledgeable employment lawyer as quickly as possible.