COBRA stands for Consolidated Omnibus Budget Reconciliation Act, which became law in 1986. COBRA is intended for those who have lost their primary means of health insurance, be it for a loss of a job or divorce from or death of a spouse or a parent under whose health insurance they were covered. It gives them the right to a temporary continuation of health care coverage at group rates. Others who also usually use COBRA insurance are persons with disabilities or recent retirees. COBRA insurance commonly covers the spouse and children of those who are insured.

Since most employers usually cover a percentage of health care costs for their employees, COBRA insurance would cost higher for those who avail of it than the one they used to have when they were employed and getting insurance through the company they worked for. Private corporations are mandated by law to provide health care coverage for their employees, and to shoulder a portion of the insurance costs for their employees. An individual availing of COBRA, however, would have to pay for all the costs him or herself.

Companies offering COBRA insurance to its employees usually offer the coverage at group rates. A COBRA user would then pay considerably less than he would be paying had he been covered by an individual health care policy because group rates tend to be lower than individual rates. If he suddenly finds himself out of a job, he will discover that he has to pay higher insurance rates although through the use of COBRA, he will still be able to avoid paying even higher costs because of the special group rate available to him.

What are included in the COBRA package?

There are specific health and medical benefits included in a COBRA insurance package. Those are:

  • Doctor care
  • Inpatient and outpatient hospital care (but not usually extended-stay care)
  • Surgery
  • Prescription drugs
  • Other medical and dental needs

Although life insurance may be an inclusion in health care packages by employers in some instances, it is not a part of any COBRA insurance package.

Who is entitled to COBRA benefits?

The three elements established to qualify for COBRA benefits. These are:

PLAN COVERAGE – Generally, the law covers group health plans availed by employers with 20 or more employees on more than 50 percent of its usual business days in the previous year. Full-time and part-time employees are counted to establish whether a plan is subject to COBRA. And while it applies to plans in the private sector and those sponsored by state and local government, it does not apply to plans sponsored by the Federal government and to some church-related organizations.

QUALIFIED BENEFICIARIES – A qualified beneficiary is someone who is covered by a group plan on the day before a qualifying event. This could either be an employee, an employee’s spouse or an employee’s dependent child. In some cases, retired employees, their spouses and dependent children may be qualified for COBRA benefits. Additionally, children born to or placed for adoption with a covered employee during the COBRA coverage period may be entitled to its benefits. Agents, independent contractors and directors participating in the group health plan may also be qualified beneficiaries.

QUALIFYING EVENTS – These are certain events that result in the loss of an individual’s primary health care coverage. The type of qualifying event determines who the qualified beneficiaries will be and the amount of time that a plan must offer health care coverage through COBRA. A plan has the discretion to provide longer periods of continuation coverage.

For employees:

  1. Voluntary or involuntary termination of employment for any reason except gross misconduct
  2. Cutback in the number of hours of employment

For spouses:

  1. Voluntary or involuntary termination of the covered employee’s employment for any reason except gross misconduct
  2. Cutback in the number of hours of employment
  3. Covered employee’s becoming entitled to Medicare
  4. Divorce or legal separation of the covered employee
  5. Death of the covered employee

For dependent children:

  1. Loss of dependent child status under the rules of the group plan
  2. Voluntary or involuntary termination of the covered employee’s employment for any reason except gross misconduct
  3. Cutback in the number of hours of employment
  4. Covered employee’s becoming entitled to Medicare
  5. Divorce or legal separation of the covered employee
  6. Death of the covered employee

Bear in mind that a spouse or child may enroll in COBRA even if the employee does not.

How long does COBRA coverage last?

The length of time you can keep the COBRA coverage would depend on the qualifying event. If you have lost your primary medical coverage due to a loss of job or reduction in your working hours, you and your qualified dependents are allowed to keep coverage under the employer’s group health insurance for up to 18 months if you pay for the full cost of the coverage.

Certain people with disabilities may also be entitled to an extra 11 months of COBRA coverage bringing the total to 29 months. However, the plan may charge an increased rate of up to 150% of the cost of coverage during the additional 11 months of extension. Qualifications for disability extension include:

  • Getting a formal disability determination from the Social Security Administration (SSA) that shows they were disabled within the first 60 days of their qualifying event. They must send a copy of the SSA ruling letter within 60 days of receipt, but prior to the expiration of the 18 month period of coverage
  • Have the disability during the rest of the 18 month coverage

Dependents that lose health care coverage due to a parent’s job loss (or any of the above-mentioned qualifying events) can get COBRA coverage for up to 36 months.

People who are covered by COBRA have the same benefits and entitlements as active employees. They can, for example, change plan options during open enrollment periods, or parents can add newborns or adopted children to their policies under COBRA.

What process must be followed in order to elect continuation coverage under COBRA?

It is the employer’s responsibility to notify the group plan administrator within 30 days of an employee’s qualifying event (i.e., termination, reduction of work hours).

In the same way, it is the qualified beneficiary’s responsibility to notify the group plan administrator within 60 days of a qualifying event (i.e., death of the covered employee, child’s loss of dependent status).

Generally, plan participants and beneficiaries must be given an election notice within 14 days after the plan administrator has received notice of a qualifying event’s occurrence to alert them of imminent health coverage loss. This will give them notice of their COBRA rights and all the information they will need to make an informed decision whether or not to avail of continued coverage.

The employee or qualified beneficiaries have 60 days upon receipt of the election notice to decide to avail of continued health insurance coverage under COBRA. They must give written notification to the COBRA administrator listed on their election notice that they opt to keep their health insurance.

You have 45 days, beginning the date you choose to continue coverage under COBRA, to pay the first premium bill. This first premium bill generally covers the period dating back to the day of loss of health care coverage due to a qualifying event to the date COBRA was chosen. Neither the health plan administrator nor the employer is required to send you monthly premium bills, make sure you keep track of and pay attention to due dates yourself.

How do I file a COBRA claim for benefits?

Health plan rules must explain how benefits can be obtained and include detailed written procedures for processing claims in the Summary Plan Description.

The employee or qualified beneficiaries have to submit a claim for benefits in compliance with the rules for filing claims established by the plan. If your claim has been denied, you must be given a written notice of the denial within 90 days after you have filed your claim. In the notice must be details stating the reasons for the denial, additional information needed to support the claim and procedures for appealing the denial. You will be given 60 days with which to appeal the denial and a decision will be reached within 60 days after your appeal.

Under what conditions is COBRA discontinued?

The following circumstances will merit a discontinuation of COBRA:

  • The covered person becomes covered under another group plan or becomes eligible for Medicare. If the new group plan has a waiting period for pre-existing conditions, you may choose to have coverage under COBRA along with the new plan until the waiting period is satisfied.
  • Premiums are not paid in a timely manner
  • The employer ceases to provide any kind of group health plan

Where can I get additional information on COBRA?

You may call  the Employee Benefits Security Administration at 1-866-444-3272 or visit their Web site at A detailed brochure called An Employee’s Guide to Health Benefits Under COBRA can be found on the Web at



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