Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA is a federal law that protects participants in group medical plans who are guaranteed continuation coverage for a certain time period if terminated for any reason except gross misconduct. Employees who are laid off are protected, not those fired for cause. COBRA rules apply to employers with a plan with twenty or more employees at any time during the year. The eligible party must elect COBRA coverage and pay the premium within 45 days. While the employer could opt to pay the premium, often it is the employee who shoulders this expense which may be up to 102 percent of the premium in effect.

For example, assume a family's health insurance premium is $1,000 a month. While an employee with the company, the employee assumed $450, the employer $550. Upon termination due to corporate downsizing, the employee now has to pay $1,020 which is 102 percent of the full $1,000 premium. Enumerated below are the events for which a terminated employee would qualify for continued coverage under COBRA:

  1. Termination: 18 months of continued coverage from the date of severance or 29 months if the employee is disabled.
  2. Termination from the plan due to a reduction in the employee's hours: 18 months of continued coverage from the date of severance or 29 months if the employee is disabled.
  3. Death of employee: dependent coverage extends to 36 months
  4. Dependent child no longer qualifies as such under the plan: this individual is eligible for 36 months of additional coverage.
  5. Employee becomes eligible to receive Medicare: this individual is eligible for 36 months of additional coverage.
  6. Divorce or legal separation: former spouse qualifies for 36 months of additional coverage

Health Insurance Portability and Accountability Act (HIPAA)
Individuals with at least 18 months of creditable coverage (group health plan, individual health insurance, Medicare, Medicaid and any state-specific programs) and without access to other health insurance must be allowed to enroll in an insurance policy.



Health Savings Accounts

Related Articles
  1. Personal Finance

    What You Need To Know About COBRA Health Insurance

    We go through everything you need to know about COBRA so that you can decide if it's right for you.
  2. Personal Finance

    Group Term Life Insurance: What You Need to Know

    Is group term life insurance really a good deal? What you need to know about employer-sponsored group term life insurance coverage.
  3. Financial Advisor

    How to Help Clients Navigate Open Enrollment

    With companies trying to pass on more costs to employees, making the right choices during open enrollment is more important than ever.
  4. Personal Finance

    Take Advantage Of Employer-Sponsored LTC Insurance

    Find out why 98% of employees are missing out on some great benefits.
  5. Trading

    Benefit Issues When Your Employer Goes Bankrupt

    There are some safeguards in place to ensure that health benefits don't just disappear when a plan is canceled.
  6. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  7. Retirement

    Is Your Health Insurance Enough For Retirement?

    Learn what to expect to pay for health insurance in retirement, what is covered through Medicare and what the Affordable Care Act means for retirees.
  8. Personal Finance

    If you can afford it, you will need minimum essential coverage

    If you can afford health insurance and you don’t have coverage in 2016, you may have to pay a fee of 2.5% of your yearly household income or $695 per person ($347.50 per child under 18). ...
  9. Personal Finance

    Selecting The Right Mix Of Insurance Benefits

    Choosing employee benefits involves weighing the probability you will need them against taxes and cost.
  10. Markets

    Split Dollar Life Insurance: How it Works

    Understanding how split dollar life insurance plans are designed and what tax regulations they must follow.
Trading Center