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What is Cobra Continuation Coverage?
Employees can maintain group health insurance benefits at work or “COBRA” (which stands for Consolidated Omnibus Budget Reconciliation Act) continuation coverage if they experience a qualifying event that would cause them to lose their coverage.
COBRA requires employers who have 20 or more staff to supply eligible workers and their households with the choice of continuing on their group medical insurance plan for a certain period, usually as much as 18 months after a qualifying event. The full cost of the insurance premium plus a 2% admin fee is to be reimbursed by the employee.
Qualifying events that may trigger COBRA continuation coverage include voluntary or involuntary job loss, reduced work hours, divorce or legal separation, and death of the covered employee. COBRA coverage provides temporary protection for individuals and families, allowing them to maintain their health insurance benefits during the transition.
How to Enroll in Cobra Continuation Coverage?
To enroll in COBRA continuation coverage, an employee or their eligible dependents must typically notify their employer within 60 days of a qualifying event that would otherwise result in a loss of health insurance coverage. The employer then has 14 days to provide the employee with a COBRA election notice, which includes information on the cost and duration of the coverage and how to enroll.
After an employee or the employee’s dependents are given notice of their COBRA election rights, they have 60 days to decide whether to elect COBRA continuation coverage. If they choose to enroll, they may have to purchase the insurance premium in full with a 2% administrative fee every month.
How Does Cobra Continuation Coverage Work?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers. Their families who lose their health benefits have the right to choose to continue the group health benefits provided by their group health plan for limited periods under certain circumstances, such as voluntary or involuntary job loss, reduction in hours worked, the transition between jobs, death, divorce, and other particular life events.
For example, under COBRA, the employee or their dependents must pay the full insurance premiums plus a 2% administrative fee. Coverage is often similar to whatever the worker’s group health insurance (if any) was while employed, letting them keep the same provider and avoid a hole in protection that could be filled by insurance from another employer.
COBRA continuation coverage usually lasts 18 months after a qualifying event. For example, it will not last as long if your first qualifying event is a loss of coverage as it would if you are claiming for disability or have a second qualifying event.
Also, See: Defined Contribution Plan
