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What is Cobra Continuation Coverage?

COBRA continuation coverage is a type of health insurance that allows employees to continue their group health insurance benefits after leaving their job or experiencing certain qualifying events that would otherwise result in a loss of coverage. COBRA stands for Consolidated Omnibus Budget Reconciliation Act.

Under COBRA, employers with 20 or more employees must offer eligible employees and their dependents the option to continue their group health insurance coverage for a limited period of time, usually up to 18 months after the qualifying event. The employee is responsible for paying the full cost of the insurance premiums plus a 2% administrative fee.

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.

Once the employee or their eligible dependents receive the COBRA election notice, they have 60 days to decide whether to enroll in COBRA continuation coverage. If they choose to enroll, they must pay the full cost of the insurance premiums plus a 2% administrative fee, typically every month.

How Does Cobra Continuation Coverage Work?

COBRA continuation coverage allows eligible employees and their dependents to continue their group health insurance benefits for a limited period of time after experiencing certain qualifying events that would otherwise result in a loss of coverage.

Under COBRA, the employee or their dependents must pay the full cost of the insurance premiums plus a 2% administrative fee. The coverage is typically the same as the employee’s group health insurance coverage while employed.

COBRA continuation coverage typically lasts up to 18 months after the qualifying event. Still, it may last longer under certain circumstances, such as disability or a second qualifying event.

Also, See: Defined Contribution Plan

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