Health benefits after employment "COBRA"

Many employees covered by health insurance plans can continue to get health benefits for a limited time after they lose their jobs. That right comes from a federal law called the Consolidated Omnibus Budget Reconciliation Act ("COBRA").

Who is covered by COBRA?
Must an employee lose his job to use COBRA?
Can an employee use COBRA even if he is fired?
Required health benefits
Can I request the employee to pay for COBRA benefits?
How long do COBRA benefits last?
Notification of rights

Who is covered by COBRA?

Any company with 20 or more employees that has a health insurance plan for its employees. Smaller companies might be covered by state laws similar to COBRA.

Must an employee lose his job to use COBRA?

No. Even if your employee is still employed but has been removed from the payroll for some reason (like a long-term leave), you must allow the employee to continue his health benefits through COBRA.

Can an employee use COBRA even if he is fired?

Yes - unless the employee was fired for doing something really bad.

Required health benefits

The health benefits under COBRA should be identical to the health benefits you provided to the employee during employment.

Can I request the employee to pay for COBRA benefits?

Yes. An employee who chooses to continue health benefits under COBRA will have to pay your monthly cost (the "group rate") of keeping him on the plan. The amount of the premium will depend on how extensive the benefits are and what you were paying to cover the employee.

It is almost always cheaper for an employee to pay for continued health coverage through COBRA than through an individual plan.

How long do COBRA benefits last?

Generally, the employee may receive COBRA benefits for 18 months after leaving the payroll.

Notification of rights

You must notify your health insurance company within fourteen days of your employee's removal from the payroll. You or your health insurance company then must send the employee information about COBRA benefits within 30 days. That information should include information on how to apply for coverage, how much the employee will have to pay, and how to pay.

The employee can still get medical attention while the COBRA forms are being processed by you or your insurance company, because COBRA rights are "retroactive" (i.e., they will cover the employee back to the date the employee left the payroll).

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