What Is Consolidated Omnibus Budget Reconciliation Act (COBRA)?

COBRA is a federal law that allows certain people to continue their employee health insurance benefits for a period of time after they are no longer employed. It was put into law in 1985 as part of the Consolidated Omnibus Budget Reconciliation Act (COBRA) and was designed to help protect those who no longer have employment. With the help of COBRA, individuals can keep their employer-sponsored health care coverage for a limited period of time, usually 18-36 months. COBRA extends the length of coverage after employees have lost their jobs due to layoffs, a change in hours, or even a promotion to another job. The goal of COBRA is to ensure that people don’t suddenly have to worry about finding and paying for health insurance while they are out of work.

How COBRA Works

COBRA requires employers who offer healthcare plans to their employees to also offer the same coverage to former employees. The employee can then opt in to the COBRA program and continue to receive the same coverage they had when employed. They will have to pay the full cost of the premium plus a small administrative fee. This cost will usually be higher than the cost they were paying under the employer paid plan, but it is still much less than the cost for a new health care policy.

It’s important to note that not all employers are required to adhere to COBRA laws, only those with 20+ employees. Employees who remain employed but had some sort of qualifying event such as a divorce or losing dependent status, may be eligible for coverage under COBRA. The period of time for which the individual is eligible to receive coverage under COBRA can vary depending on the situation, but is typically between 18-36 months.

COBRA and COVID-19

Due to the coronavirus pandemic, the Department of Labor has issued special rules regarding COBRA coverage. Under the COVID-19 relief bill (known as the Coronavirus Aid, Relief, and Economic Security Act or CARES Act), those who qualify for COBRA and were on or had elected COBRA as of March 1st, 2020 have their premiums subsidized by the federal government for the period between April 1, 2020 and September 30, 2020. During this time, employers are not required to bear the cost of the subsidized premiums.

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COBRA is an important federal law for those who have lost their jobs or had a change in hours. It provides a way for individuals to maintain their healthcare coverage and keep up with their medical bills during a time of financial uncertainty. Knowing your rights and responsibilities under COBRA will give you the assurance that you have the coverage you need when times are tough or life changes course.

Related Legal Concepts

COBRA intersects with several important employment and civil rights laws that protect workers in various circumstances. The Americans With Disabilities Act (ADA) and Age Discrimination in Employment Act (ADEA) provide additional protections for employees who may face qualifying events under COBRA due to discrimination or disability-related job changes. The Administrative Procedure Act governs how federal agencies like the Department of Labor implement and enforce COBRA regulations, while the American Recovery and Reinvestment Act of 2009 included provisions for COBRA premium assistance during economic downturns, similar to the COVID-19 relief measures.

The Bottom Line

COBRA serves as a crucial safety net for maintaining health insurance coverage during employment transitions, though it requires careful attention to enrollment deadlines and premium obligations. Understanding your eligibility, coverage periods, and costs under COBRA can help bridge the gap between employer-sponsored benefits and finding new coverage. For guidance specific to your situation, always consult a qualified, licensed attorney.