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CONSOLIDATED
OMNIBUS BUDGET RECONCILIATION ACT (COBRA)
Discussion
COBRA generally
applies to group health plans maintained by employers with 20 or more
employees during the prior year. COBRA ensures that qualifying
beneficiaries (former employees, employee’s spouses, dependent children)
have the option of continuing health insurance for a certain time period
after a qualifying event (such as the separation of employment, death,
divorce, etc.). The qualifying event will then determine the period of coverage.
Beneficiaries may be required to pay for COBRA coverage at a rate of
102% or more of the cost of similar coverage.
Employers must
furnish an initial notice describing COBRA rights and must give the
beneficiary at least 60 days for the election. Initial payment by the
beneficiary must be made within 45 days after the date of the COBRA
election.
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