Health insurance allows workers and their families to take care of essential medical needs and can be one of the most important benefits provided by employers. Before 1986, group health coverage was available only to full-time employees and their families. The Consolidated Omnibus Budget Reconciliation Act (COBRA) changed that and now terminated employees or those who lose coverage because of reduced work hours are eligible to continue their group coverage for limited periods of time.
When an employee loses his or her job, employers subject to the COBRA or any state continuation coverage law (also called “mini-COBRA laws”) must offer the option to continue health insurance coverage to the employee and any family members covered by his or her group health plan. Employees and their families who lose their health benefits can continue under their group health plan under certain circumstances such as voluntary or involuntary job loss, reduction of hours, transition between jobs, death, divorce and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
COBRA sets the regulations for how and when continuation coverage must be offered and provided, how employees and their families may elect continuation coverage, and what circumstances justify terminating continuation coverage. For instance, to be eligible for COBRA coverage, you must have been enrolled in your employer's health plan when you were employed and the health plan must continue to be in effect for active employees.
Under COBRA, group health plans must provide covered employees and their families with specific notices explaining their COBRA rights. The qualifying events contained in the law create rights and obligations for employers, plan administrators and qualified beneficiaries.