Tuesday, February 24, 2009

Do you know? Continued health benefits under COBRA

Last week, the federal government mandated a 65% employer-sponsored subsidy of employees’ health insurance premiums under COBRA for those employees involuntarily severed from employment between September 1, 2008, and December 31, 2009.

Do you know? What is COBRA, who and what does it cover, and what does it require?

“COBRA” stands for the Consolidated Omnibus Budget Reconciliation Act of 1986. It covers employer-sponsored group health plans of businesses that employed at least 20 employees (both full-time and part-time) on more than 50% of its typical business days in the previous calendar year. COBRA only applies to group health plans. It does not cover other type of employer-sponsored plans, such as disability or life insurance plans.

It requires employers to offer continuation coverage to covered employees, their spouses, their former spouses, and their dependent children when group health coverage would otherwise be lost due to certain specific events. The following chart summarizes the various qualifying events under COBRA, which beneficiaries are eligible for continuation coverage, and for how long:

Termination for reasons other than gross misconduct) or reduction of hours of employment Employee
Dependent Child
18 months
Employee enrollment in Medicare Spouse
Dependent Child
36 months
Divorce or legal separation Spouse
Dependent Child
36 months
Death of employee Spouse
Dependent Child
36 months
Loss of “dependent child” status under the plan Dependent Child 36 months


Employers may require individuals who elect continuation coverage to pay the full cost of the coverage, plus a 2% administrative charge.

When a qualifying event occurs, employers must provide the employee or other beneficiary a notice describing their rights under COBRA and a form under which they can elect whether to continue group health coverage under COBRA.

Note that Ohio has its own mini-COBRA law, which requires the extension of COBRA benefits for 6 months to employers of as few as 10 employees.