- Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise would be terminated.
- The law generally covers group health plans maintained by employers with 20 or more employees in the prior year. It applies to plans in the private sector and those sponsored by state and local governments. The law does not, however, apply to plans sponsored by the Federal government and certain church- related organizations.
- Qualified beneficiaries have a 60-day period to elect whether to continue coverage
- COBRA beneficiaries generally are eligible to pay for group coverage during a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work
- Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage (ex: employees enrolled in Medicare)
- If a qualified beneficiary is determined under Title II or XVI of the Social Security Act to have been disabled within the first 60 days of COBRA coverage, then that qualified beneficiary and all of the qualified beneficiaries in his or her family may be able to extend COBRA continuation coverage for up to an additional 11 months. (An individual who has been determined under title II or title XVI of the Social Security Act to have been disabled before the first day of COBRA continuation coverage, and who has not been determined to be no longer disabled at any time between the date of that disability determination and the first day of COBRA continuation coverage, is considered to be disabled within the first 60 days of COBRA continuation coverage.) However, qualified beneficiaries should be aware that they may lose all rights to the additional 11 months of coverage if notice of the determination is not provided to the plan administrator within 60 days of the date of the determination and before the expiration of the 18-month COBRA continuation period. The qualified beneficiary who is disabled or any qualified beneficiaries in his or her family may notify the plan administrator of the determination.
- The Centers for Medicare and Medicaid Services (formerly Health Care Financing Administration)/U.S. Department of Labor in Kansas City, MO can answer COBRA questions: 866-275-7922
- Under a law known as the Health Insurance Portability and Accountability Act (HIPAA), an individual who exhausts COBRA coverage may have a right to enroll in a group health plan provided by a spouse’s employer, without having to wait for an open enrollment period, if the individual is otherwise eligible. This HIPAA provision is known as "special enrollment." However, an individual must request special enrollment within 30 days of the date COBRA coverage ends. If other group health plan coverage is not available, an individual who exhausts COBRA coverage and meets certain other conditions may qualify under HIPAA for individual health insurance coverage on a guaranteed available basis. That individual coverage generally cannot exclude services related to any preexisting medical conditions the individual may have. One of the conditions that must be met is that the individual's most recent period of coverage must be employer-sponsored group health plan coverage. COBRA coverage meets that requirement; a COBRA conversion policy does not. An individual who takes a COBRA conversion policy cannot switch from the conversion policy to other individual health insurance coverage on a guaranteed available basis. For more information about individual health insurance coverage on a guaranteed available basis, contact your state’s department of insurance and ask to speak to someone about obtaining individual health insurance coverage as a "HIPAA eligible individual".
COBRA and Divorce
Under COBRA, participants, covered spouses and dependent children may continue their plan coverage for a limited time when they would otherwise lose coverage due to a particular event, such as divorce (or legal separation)
A covered employee’s spouse who would lose coverage due to a divorce may elect continuation coverage under the plan for a maximum of 36 months. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation. After being notified of a divorce, the plan administrator must give notice, generally within 14 days, to the qualified beneficiary of the right to elect COBRA continuation coverage.
Divorced spouses may call their plan administrator or the EBSA Toll-Free number, (866) 444-3272 if they have questions about COBRA continuation coverage or their rights under ERISA
COBRA and Medicare
- If you already have COBRA when you enroll in Medicare, your COBRA coverage usually ends on the date you enroll in Medicare. If you have COBRA and become Medicare-eligible, you should enroll in Part B immediately because you are not entitled to a Special Enrollment Period (SEP) when COBRA ends. Your spouse and dependents may keep COBRA for up to 36 months, regardless of whether you enroll in Medicare during that time.
- If you already have Medicare when you become eligible for COBRA, you must be allowed to enroll in COBRA. Unless you qualify for Medicare because you have ESRD, Medicare acts as the primary payer and COBRA as the secondary payer, so you should stay enrolled in Medicare Part B. You may wish to take COBRA if you have very high medical expenses and your COBRA plan offers you generous extra benefits, like prescription drug coverage.