Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Federal law requires employers with 20 or more employees to offer group health care continuation coverage to eligible employees, including part-time employees, and their dependents, when a “qualifying event” results in a loss of coverage. This law is known as the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA.

“Qualifying events” under COBRA may include an employee’s voluntary or involuntary termination from employment, except for gross misconduct, as well as the employee’s death or divorce from his or her spouse.

“Qualified beneficiaries” who would lose coverage under the employer’s group health plan due to certain “qualifying events” must be given the opportunity under COBRA to purchase continued coverage under the plan at a cost of up to 102 percent of the applicable group rates for periods of up to 18, 29 or 36 months.

COBRA applies to employer group health plans that provide medical, dental, vision or prescription drug coverage – regardless of whether the benefits are paid directly by the employer or through an insurance carrier.

Once a “qualifying event” occurs, the plan administrator must identify the individuals eligible for COBRA rights and issue notices to them in a timely manner. However, in the case of certain qualifying events, like divorce, the affected employee and or spouse must notify the plan administrator, who in turn issues the notices.

Under the American Recovery and Reinvestment Act of 2009 (ARRA), persons may be eligible for a temporary reduced COBRA premium of up to 65 percent off the full cost for up to 15 months if they experienced a loss of health care coverage due to an involuntary termination of employment between Sept. 1, 2008 and Feb. 28, 2010.

Some states have “mini-COBRA” laws that mirror or in some cases provide more generous health care continuation coverage benefits than the federal law.