U.S. Law is a Precursor to Obama Care
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers the right to continue employer-supplied group health benefits for a limited period of time after job loss, a reduction in hours worked, transition between jobs, or various life events.
Though qualified individuals may need to pay up to 102% of the cost to the plan, the legislation requires that federal, state, and employers with 20 or more employees offer an extension of health coverage (called continuation coverage) to their employees following the disruption of regular health benefits. Since the employer usually pays part of the cost of employees’ coverage, COBRA participation is often more expensive than the amount previously paid for coverage.
Other Options for Health Care Coverage
Today, additional options for coverage are available. The new Health Insurance Marketplace created through Obama Care offers health insurance policies and comprehensive coverage ranging from bare-bones catastrophic policies, to full-benefit policies that include vision, dental, and alternative medicine coverage. Employees do have a limited time to apply for coverage before they become ineligible.
Alternately, employees may opt for enrollment in private insurance companies through the Health Insurance Portability and Accountability Act (HIPAA) which allows employees the right to bypass the waiting period for enrollment. In these cases, an employee may elect to join the policy of a spouse or parent within 30 days from their loss of coverage.
Qualifying for COBRA Coverage
Qualifying events for continued coverage include termination of employment (other than for gross misconduct), a reduction in the number of hours of employment, divorce or legal separation from the covered employee, or death of the covered employee. COBRA requires that the continuation coverage extend for a period of 18 or 36 months, depending on the reason for coverage loss.
When employees elect continuation coverage, they are required to make an initial premium payment within 45 days after the date of COBRA election. Failure to make any payment within that period of time could cause a loss of all COBRA rights. Group health plans must provide covered employees with notices explaining their COBRA rights in the plan’s summary plan.