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Consolidated Omnibus Budget Reconciliation Act (COBRA)
The landmark COBRA health benefit provisions became law 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 employer-sponsored group health coverage that otherwise might be terminated.
COBRA contains provisions giving certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.
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. (The Federal Employees Health Benefit Program is subject to generally similar, although not parallel, temporary continuation of coverage provisions under the Federal Employees Health Benefits Amendments Act of 1988). Under COBRA, a group health plan ordinarily is defined as a plan that provides health care benefits for the employer's employees and their dependents through insurance or another mechanism such as a trust, health maintenance organization, self-funded pay-as-you-go basis, reimbursement or combination of these.
Health care benefits provided under the terms of the plan and available to COBRA beneficiaries may include:
- Inpatient and outpatient hospital care
- Physician care
- Surgery and other major medical benefits
- Prescription drugs
- Any other health care benefits, such as dental and vision care.
Life insurance, however, is not covered under COBRA.
Jurisdiction
The Centers for Medicare & Medicaid Services, Department of Health and Human Services, has advisory jurisdiction with respect to COBRA as it applies to state and local governmental employers and their group health plans. The Employee Benefits Security Administration, Department of Labor, and the Internal Revenue Service, Department of the Treasury, share jurisdiction with respect to COBRA as it applies to private sector employers and their group health plans. The Office of Personnel Management has jurisdiction with respect to similar continuation of coverage provisions that apply to agencies of the Federal Government. (See Role of Federal Government/More Information).
What You Need to Know
Individuals who work for a state or local government employer, and their dependents, should be aware of their rights regarding COBRA. Workers need to be aware of changes in health care laws to preserve their benefit rights. A good starting point is reading your summary plan description (SPD) booklet, if a state or local governmental employer distributes an SPD to its employees. Most of the specific rules on COBRA rights can be found there or with the person who manages your health benefits plan. Also, be sure to contact the health plan periodically to find out about any changes in the type or level of benefits offered by the plan. Detailed information regarding various aspects of COBRA can be found by clicking on the links below.
Role of the
Federal Government/More Information
Alternatives to COBRA Coverage
In deciding whether to elect COBRA continuation coverage, you should consider all your health care options. For instance, one option that may be available is "special enrollment" in a group health plan sponsored by a spouse’s employer, if enrollment is requested within 30 days of loss of your health coverage. (If you decide to elect COBRA coverage, special enrollment also is available in a spouse’s plan after COBRA continuation coverage is exhausted). The special enrollment right is provided by the Health Insurance Portability and Accountability Act (HIPAA). For more information about special enrollment rights under HIPAA, contact your state’s department of insurance, or visit our HIPAA website at http://www.cms.hhs.gov/hipaa1. If the group health plan provided by a spouse’s employer is a self-funded, private sector (not governmental) plan, contact the Employee Benefits Security Administration, Department of Labor. (See Role of the Federal Government/More Information.) Also, individuals in a family may be eligible for health insurance coverage through various state programs. For more information about state programs, contact your state’s department of insurance.
Coverage After COBRA
If you elect COBRA continuation coverage, alternatives that may have been available to you before electing COBRA coverage may still be available after COBRA coverage is exhausted. Additionally, you and your family may qualify for individual health insurance coverage as "HIPAA eligible individuals" when COBRA coverage is exhausted. (COBRA coverage is exhausted when it ends for any reason other than either failure of the individual to pay premiums on a timely basis or for cause, such as making a fraudulent claim.) HIPAA eligible individuals are eligible for individual health insurance coverage on a guaranteed available basis with no exclusion period for preexisting medical conditions. Certain criteria must be met. For more information about obtaining individual health insurance coverage as a HIPAA eligible individual, please visit our HIPAA website at http://www.cms.hhs.gov/hipaa1 or contact your state’s department of insurance (preferably before your COBRA coverage ends).
