The Basics of COBRA
In 1986, Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA requires that most group health plans give employees the ability to temporarily continue health coverage, at group rates, that otherwise might be terminated. This is critical for workers, and their families, who would have otherwise lost their health coverage because the employee was terminated, their hours were reduced, or they passed away. These events are examples of “qualifying events.” Health plans must provide covered employees and their families with specific notices explaining their COBRA rights.
A group health plan is any arrangement by an employer that provides employees and their families with medical care, which includes:
- Hospital care
- Physician care
- Surgery and other major medical benefits
- Prescription drugs
- Dental and vision care
COBRA applies to all private-sector group health plans maintained by employers that have at least 20 employees, as well as plans sponsored by state and local governments. Health plans sponsored by the Federal government and certain churches do not fall within the scope of COBRA.
The initial premium payment for coverage must be made within 45 days after the date of the COBRA election by the qualified beneficiary. The first payment must apply retroactively to the date of the qualifying event, usually the employee’s termination.
COBRA does contain some payment protections for beneficiaries. Each subsequent premium payment must have a minimum 30-day grace period. Although the plan is not required to send monthly invoices to beneficiaries, it must notify them of minor deficiencies in their payments and allow beneficiaries a reasonable period of time to correct it.
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.