What is COBRA?
For the remainder of the summer, we will be reposting educational material on Health Insurance Basics which was originally aired in 2021, with updated 2022 information as appropriate. If you didn’t watch these videos, please do, and tune back in after Labor Day for new material. Thanks, and have a wonderful summer.
Our featured video today is on COBRA. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA is the temporary extension of group coverage at an individual’s expense (unless the employer has agreed to subsidize the COBRA for some length of time).
The purpose of the COBRA legislation was to provide a temporary safety net so that coverage could be extended for job loss (voluntary or involuntary), a reduction in hours making one ineligible for coverage, for dependents losing their coverage due to divorce, retirement or death of a spouse or parent and young adults aging off a parent’s Plan. In 1985, individual coverage was medically underwritten in most states so it was possible to lose group coverage and not qualify for coverage in the individual market due to pre-existing conditions. In these situations, there was other federal legislation which provided another coverage guarantee, most typically through a High Risk Pool, but this coverage was unaffordable for most Americans.
COBRA federal legislation applies to employers of 20 or more employees. The federal program allows people to extend their group coverage as follows:
Employees and former employees: up to 18 months
Dependents: up to 36 months
Those on SSDI (disability): up to 29 months
Small employers with under 20 employees are regulated by the states and therefore the maximum timeframes for COBRA vary based on state law. In many states the timeframes are shorter than what federal COBRA allows. Conversely, in New York, the maximum timeframe is more generous for a worker. A worker can enjoy up to 36 months of COBRA if the Plan is regulated under New York state law. However, if the Plan is self-funded, federal law applies (our video on “A Dispute with Your Plan” discusses how to determine if your plan is regulated by a state or the federal government).
When you are on COBRA, you are an appendage to the group policy so if the group changes its coverage, your options change and if the employer goes out of business and there is no group Plan, your coverage ends.
COBRA is an important protection but this brief summary only touches on several key issues. If you need to learn more about COBRA, you can find a great deal of information on the U.S. Department of Labor website at www.dol.gov/general/topic/health-plans/cobra.
Please watch the video and encourage family and friends to learn more about healthcare coverage by watching too. Thanks so much.