Consolidated Omnibus Budget Reconciliation Act (COBRA)

Of all the federal laws governing the workplace, COBRA is at the top of the list in terms of complexity and confusion. It sounds like such a simple law, and its intent was certainly noble. It’s basically a safety net for employees and their families to keep their health insurance, at their own expense, when they’re in between jobs or other major events happen in their lives – like getting separated or divorced.

Generally, COBRA coverage can last up to 36 months depending on the circumstances. Employers with at least 20 employees are covered by the Act. Some states have similar laws that apply to smaller employers or require longer periods of continuation coverage.

Related articles on COBRA
COBRA tools for Employment Law Letter subscribers

But what started out as a seemingly simple premise has evolved into a monolithic jumble of statutes, regulations, and regulatory documents. Not to mention the morass of case law interpreting what the law and regulations say and require.

One word of caution: It’s impossible to answer every question that may arise about COBRA compliance in a few paragraphs or even pages. For many questions about COBRA, consulting a competent benefits attorney is the only way to be completely sure of compliance.

COBRA enforcement

The U.S. Department of Labor (DOL) is responsible for interpreting and administering the COBRA provisions that appear in the Employee Retirement Income Security Act (ERISA), while the Internal Revenue Service (IRS) is responsible for interpreting and enforcing the provisions that appear in the Internal Revenue Code. The two agencies share responsibility for enforcing COBRA.

COBRA notification

The law requires employers to comply with several notice requirements to inform employees and their dependents of their rights to continued health coverage under COBRA. Separate notices must be given to employees (and their spouses) when they first start participating in your plan and to employees and dependents after they experience an event that would cause them to lose coverage under your plan.

COBRA qualifying events

Qualifying events that can trigger COBRA rights include the following:

• termination (including firing for a reason other than gross misconduct, retiring, or quitting);
• reduction in hours so that the employee is no longer qualified for the health plan;
• major life events (An employee’s spouse and dependent children may be entitled to COBRA coverage when the employee dies, the employee becomes entitled to Medicare, or the employee and spouse get divorced or legally separated.); and
• layoff.

Military leave and health insurance coverage continuation

Going on military leave can be a qualifying event because of a reduction in hours. Employees on military leave also are protected by the Uniformed Services Employment and Reeemployment Rights Act (USERRA), which allows them to continue health care coverage, at their expense, for themselves and covered dependents for up to 24 months.

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Related articles on COBRA from the State Employment Law Letters
designates additional valuable resources available exclusively to Employment Law Letter subscribers

HR Tools for COBRA)

• HR Executive Special Report - How to Comply with COBRA Without Getting Bit
  (available for purchase by nonsubscribers)
  
• Sample Policy - Continuation of Health Care Plan Coverage
• Sample Policy - Health and Welfare Benefits
• Forms - COBRA