The 411 on COBRA

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Kimberly Joyce

In my years of experience in the HR/Staffing industry, I’ve had to explain COBRA to many employees (new & former). Questions such as “What does it mean, what are the restrictions, how does it work, what are the qualifications, etc.?”

What you need to know about COBRA and how it can apply to you:

What is COBRA?

COBRA stands for the “The Consolidated Omnibus Budget Reconciliation Act.” COBRA is simply a temporary continuation of healthcare coverage for former employees when coverage is lost due to qualifying events. The healthcare coverage is a continuation of the group health benefits provided by their group health plan. This is only for a limited period of time to the employee.

What is considered a qualifying event?

Qualifying events are considered certain circumstances that would cause an individual to lose health coverage. These events include but are not limited to voluntary or involuntary job loss, reduction in hours worked, death and divorce.

How much does it cost?

Individuals that qualify for this may be required to pay the entire premium for coverage- up to 102 percent of the cost of the plan. Usually, COBRA coverage is the full premium cost + 2%.

What happens if my previous/current company is going through a closure?

Anytime an employer has a reduction of benefits, your group health plan MUST notify you within 60 days. If your current company is reorganizing or merging with another company and has maintained several health plans but still discontinues most of their plans, you may be eligible to continue coverage in its remaining plan. However, if your current employer discontinues or terminates all of their group health care – then you are not eligible for COBRA.

Remember, to make sure to talk to your company’s Human Resources or Benefits Administrator about your individual situation. The plan administrator must provide notice to individual employees of their right to elect COBRA coverage within 14 days after the administrator has received notice from the employer.

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