What is Continuation Coverage under COBRA?
Consolidated Omnibus Budget Reconciliation Act (COBRA) requires group health plans to offer continuation coverage to employees, former employees, spouses, former spouses, and dependent children, known as “qualifying beneficiaries,” when group health coverage would otherwise be lost due to certain specific events, called “qualifying events.” A qualified beneficiary is any person covered by a group health plan on the day before a qualifying event. Qualifying events include:
- The death of a covered employee
- Termination or reduction in the hours of a covered employee's employment for reasons other than gross misconduct
- When a covered employee becomes entitled to Medicare
- Divorce or legal separation of a covered employee and spouse
- Child's loss of dependent status (and coverage) under the health plan.
COBRA establishes comprehensive rules for continuation coverage, including how it must be offered and provided, how employees and their families can elect it, what circumstances justify terminating coverage, and notifications required of the employer. In most cases, COBRA coverage lasts up to 18 months. Under certain circumstances it can extend to 29 or 36 months.
Qualified beneficiaries, such as employees and their family, must be offered the same coverage available to similarly situated beneficiaries not on COBRA. The premium for continuation coverage cannot exceed 102 percent of the cost of the plan for similarly situated individuals. However, the premium can be raised to 150 percent of the cost during the 11-month disability extension. COBRA premiums are paid by beneficiaries, and are generally fixed in advance of each 12-month premium cycle. The plan must permit qualified beneficiaries to pay premiums on a monthly basis.
If you have any questions regarding your rights or obligations under COBRA, consult an experienced Georgia employment and labor law attorney that can provide you with the guidance you need.