Human Resource Blog

What is COBRA and who gets it?

In Tennessee, what is COBRA and who gets it?

COBRA is a federal program that permits employees and their dependents to keep group insurance coverage after termination. COBRA also applies when an employee or dependent loses his or her coverage, as in a divorce, change in status from full-time to part-time, or for another reason. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act.

COBRA applies to employers who have 20 or more employees on a group health insurance program. Under COBRA, the employer has 30 days to notify the insurance plan administrator of the employees termination (or other qualifying event.) The administrator must sent the employee COBRA election forms within 14 days. The employee then has up to 60 days to decide whether he or she will keep the group health insurance.
When an employer is self-insurec, the HR pro may be the COBRA administrator. Usually, however, this duty is handled by the insurance company.
Employees who are fired for gross misconduct do not qualify for COBRA.
If the employee opts to keep the group health insurance, then the employee must pay the entire premium, including any portion that the employer was paying in the past. In addition, the employer may require that the employee pay an additional 2% administration fee.

By law, employers must notify eligible employees of COBRA availability in writing after termination. This is a very complex issue, and includes more regulations than we can cover in this space. Contact your health insurance carrier for sample COBRA forms and more information.

Read more about COBRA regulations at:http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.HTML