COBRA

Definition

A health benefit provision, passed as the Consolidated Omnibus Budget Reconciliation Act in 1986, COBRA provides for the continuation of group health coverage that otherwise would be terminated.  COBRA gives certain former employees, retirees, spouses, and children temporary health coverage at group rates.

Explanation

Generally, COBRA requires group healthcare coverage for companies with 20 or more employees; and under certain conditions where coverage would otherwise be terminated.  Qualifying COBRA events for employees include:

  • Voluntary, or involuntary, termination of employment for reasons other than gross misconduct
  • Reduction in the number of hours of employment

Qualifying COBRA events for spouses include:

  • Voluntary, or involuntary, termination of the spouse's employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee
  • The spouse becoming entitled to Medicare
  • Legal separation or divorce
  • The passing away of the covered spouse

Qualifying COBRA events for dependent children include:

  • Loss of dependent child status under the medical plan rules
  • Voluntary, or involuntary, termination of the covered employee's employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee
  • The covered employee becoming entitled to Medicare
  • Legal separation or divorce of the covered employee
  • The passing away of the covered employee

COBRA beneficiaries are generally entitled to group coverage for a maximum of 18 months for the qualifying events mentioned above.  Under certain conditions, such as a second qualifying event during the initial period of coverage, extensions may be granted up to a maximum of 36 months.

Related Terms

health maintenance organization, preferred provider organization, point of service, employee assistance programmandatory employee benefits, workers' compensation