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An Employee's Guide to Health Benefits Under COBRA

Table of contents

Introduction.........................................................................................1
What is COBRA Continuation Coverage? ........................................2
Who Is Entitled to Continuation Coverage?.....................................4
Your COBRA Rights and Responsibilities:
Notice and Election Procedures .......................................................5
Benefits Under Continuation Coverage ...........................................8
Duration of Continuation Coverage..................................................8
Chart: Summary of Qualifying Events,
Qualified Beneficiaries, and
Maximum Periods of Continuation Coverage................................10
Paying for Continuation Coverage..................................................11
Coordination with Other Federal Benefit Laws .............................12
Role of the Federal Government.....................................................12
Resources .........................................................................................13

Introduction

A health plan helps workers and their families take care of their essential medical needs. It is
one of the most important benefits provided by an employer.


There was a time when employer-provided group health coverage was at risk if an employee was fired, changed jobs, or got divorced. Under the Consolidated Omnibus 

Budget Reconciliation Act (COBRA), many employees and their families who would lose group health coverage because of serious life events are able to continue their coverage

under the employer’s group health plan, usually at their own expense, at least for limited periods of time.


This booklet explains your rights under COBRA to a temporary extension of employer-provided group health coverage, called COBRA continuation coverage.

This booklet will:

  • Provide a general explanation of your COBRA rights and responsibilities
  • Outline the COBRA rules that group health plans must follow
  • Highlight your rights to benefits while you are receiving COBRA continuation coverage. 

What Is COBRA Continuation Coverage?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires most group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated. COBRA requires continuation coverage to be offered to covered employees, their spouses, their former spouses, and their dependent children when group health coverage would otherwise be lost due to certain specific events. Those events include the death of a covered employee, termination or reduction in the hours of a covered employee’s employment for reasons other than gross misconduct, divorce or legal separation from a covered employee, a covered employee’s becoming entitled to Medicare, and a child’s loss of dependent status (and therefore coverage) under the plan.


Employers may require individuals who elect continuation coverage to pay the full cost of the coverage, plus a 2 percent administrative charge. The required payment for continuation coverage is often more expensive than the amount that active employees are required to pay for group health coverage, since the employer usually pays part of the cost of employees’ coverage and all of that cost can be charged to the individuals receiving continuation coverage.

While COBRA continuation coverage must be offered, it lasts only for a limited period of time. This booklet will discuss all of these provisions in more detail. COBRA generally applies to all group health plans maintained by private-sector employers (with at least 20 employees) or by state and local governments. The law does not apply, however, to plans sponsored by the Federal Government or by churches and certain church-related organizations. In addition, many states have laws similar to COBRA, including those that apply to health insurers of employers with less than 20 employees (sometimes called mini-COBRA). Check with your state insurance commissioner’s office to see if such coverage is available to you.


Under COBRA, a group health plan is any arrangement that an employer establishes or maintains to provide employees or their families with medical care, whether it is provided through insurance, by a health maintenance organization, out of the employer’s assets on a pay-as-you-go basis, or otherwise. “Medical care” typically covered by a group health plan for this purpose includes:

  • Inpatient and outpatient hospital care
  • Physician care
  • Surgery and other major medical benefits
  • Prescription drugs
  • Dental and vision care.

Life insurance is not considered “medical care,” nor are disability benefits. COBRA does not cover plans that provide only life insurance or disability benefits. Group health plans covered by COBRA that are sponsored by private-sector employers generally are governed by ERISA – the Employee Retirement Income Security Act of 1974. ERISA does not require employers to establish plans or to provide any particular type or level of benefits, but it does require plans to comply with ERISA’s rules. ERISA gives participants and beneficiaries rights that are enforceable in court.

Click the link below for more information

CLICK HERE   For the complete PDF Document on COBRA Coverage

Frequently Asked Questions