Human Resource Blog

COBRA Basics

I am interning within the HR department at Richmond, Virginia-based law firm this summer. I’m supposed to go over the COBRA forms with a laid-off employee next week. Can you tell me more about them?

Sure. COBRA stands for Consolidated Omnibus Budget Reconciliation Act and is part of a federal law that governs employee benefits. Basically, if your law firm sponsors a health group with a health insurance company (and most law firms do), the firm must allow all participants to continue their health insurance after they leave the company as long as they qualify for benefits. As such, the employee will not lose coverage immediately following their unemployment period.

The COBRA coverage periods range for every case and can last for 18, 29, or 36 months after the end of the job. The employer determines how long the length of coverage lasts. For example, if an employee is laid off, then he or she will likely receive coverage for 18 months. If the employee qualifies for Title II or XVI of the Social Security Act and the employee has disability coverage within 60 days of COBRA coverage, then the 18 month COBRA period can be extended to 29 months. Also, the COBRA benefits can extend to 36 months if the covered person dies, is no longer a dependent child, becomes entitled to Medicare, or if the employee gets divorced or separated.

There are a few exceptions to the COBRA policy, but your law firm probably doesn’t qualify. In any event, those exceptions are:

A small business that employs less than 20 people 50% of the time for the previous 12 months does not need to offer a COBRA plan.

Churches do not have to provide COBRA policies. However, other tax-exempt employers do.

The federal government does not have to offer COBRA.

Keep in mind that if an employee leaves for uniform service (such as the military), then the firm must provide COBRA benefits, according to the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERA), even if the company has fewer than 20 employees.

The employee must also leave the company with good standing and cannot be terminated because of gross misconduct.