The 1986 Consolidated Omnibus Budget Reconciliation Act (COBRA) extends group health care coverage for employees and other beneficiaries that have involuntarily lost their employment or had a reduction in the number of hours that they work. COBRA allows qualifying individuals to continue to receive group health care coverage at a group rate for a limited period of time.
Most health care coverage plans provide a variety of different health care coverage options for employees. Employees may have the option of choosing which plan most suits their needs. If an employee elects to enroll in COBRA, the employee may decide to switch his or her coverage options to a plan with a lower rate.
Employees should complete the Switching COBRA Continuation Coverage Benefit form if they want to change their COBRA health care plan options from the options they had while employed. They have up to 90 days to make these changes. However, there are additional changes to the COBRA requirements that may apply to some employees.*
Who Qualifies for COBRA Continuation
Employees that have involuntarily lost their jobs or had a reduction in their hours may elect to be covered by COBRA. In order to be covered, employees need to complete the COBRA Continuation of Coverage form within 60 days of a qualifying event, such as a lay off.
Potential COBRA beneficiaries include:
- Former employees
- Retirees
- Spouses of former employees or retirees
- Former spouses of former employees and retirees
- Former spouses of employees and retirees
- Dependent children
How to Enroll in COBRA Continuation Coverage Plans
After an employee has qualified for COBRA coverage, the employer must notify the health care plan administrator within 30 days of the qualifying event.
Former employees and beneficiaries should be sent a plan election notice within 14 days of the date that the plan administrator receives notification of the qualifying event. The individual has up to 60 days to enroll in the COBRA plan. After enrolling in the COBRA plan, the individual has up to 45 days to pay the first premium.
Requirements for Employers
COBRA applies to state and local governments, employee organizations, and private-sector employers that have at least 20 employees.
When an employee has had a qualifying event, such as when an employee is laid off, the employer must notify the health care plan administrator within 30 days of the qualifying event. The employer should also provide the employee with the COBRA Coverage Election form so that the employee is aware of his or her options and can apply for the COBRA coverage.
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