Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986. It adds amendments to the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage.
COBRA set forth regulations that give employees and their families, who lose their health benefits because of unemployment, the right to choose to continue group health benefits provided by their group health plan. These health care benefits may be extended for limited periods of time under certain circumstances, according to the COBRA regulations.
The COBRA regulations state that circumstances such as voluntary or involuntary job loss, reduction in the number of hours an employee works, transition and life events such as death, divorce and unemployment may make individuals eligible for continuing health care benefits. Qualified individuals may be required by the employer to pay the entire health insurance premium for health care coverage up to 102 percent of the cost to the plan.
COBRA regulations state that the health insurance plan used by an employer, with 20 or more employees in the prior year, must provide for continuing coverage via COBRA.
Employers must notify health plan administrators within 30 days after an employee appears eligible. Plan participants and beneficiaries generally must be sent a COBRA election notice within 14 days of the plan's notification.
The individual has 60 days to decide whether to elect COBRA continuation health coverage and 45 days after electing coverage to pay the initial premium.
More Information About COBRA Regulations
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