What is COBRA?
The federal COBRA program applies to all employer group health plans that provide medical, dental, vision or prescription drug coverages. COBRA (an acronym for the Consolidated Omnibus Budget Reconciliation Act) affects employers with 20 or more employees (counting part-time as well as full-time, and counting people whether or not they participate in the health plan). "Employees" can include self-employed individuals, partners and independent contractors if they are eligible to participate in the group health plan. Most states have enacted their own “mini-COBRA” plans that affect smaller employers and closely parallel the federal program.
Duration of the COBRA period varies depending on what triggered the COBRA requirement. If the qualifying event was a termination or a reduction in hours, the employee, spouse and dependent children can get COBRA coverage for up to 18 months, which can be extended to 29 months by reason of disability. A spouse or dependent child can get COBRA coverage for up to 36 months based on death, divorce or legal separation, or the employee becoming eligible for Medicare.
COBRA coverage ends if the qualified beneficiary fails to make timely payments, becomes eligible for Medicare, or becomes covered by (not merely eligible for) a group health plan that is not maintained by the original employer, unless the new plan contains an exclusion or limitation that applies a pre-existing condition of the qualified beneficiary.
When you become entitled to elect COBRA continuation coverage, be sure to consider all options available. Under the Health Insurance Portability and Accountability Act, if you or your dependents are losing eligibility for group health coverage, you may have the right to "special" enroll in the Health Insurance Marketplace. Other alternatives available include group health plan coverage through your spouse's plan or Medicaid.
For more information and answers to frequently asked qustions about COBRA continuation health coverage go to http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html.