What Is the consolidated omnibus budget reconciliation act?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that mandates the right to continuation of health coverage for a worker and his or her family when health benefits are lost. If the worker chooses, group health benefits can be continued under his or her group health plan for a certain period of time. In most cases, businesses that employ 20 or more workers in the year prior are required to offer COBRA when a worker is faced with a situation in which his or her coverage would end. COBRA is typically more expensive than the individual would have paid for coverage as an active employee, and it does not apply to plans related to the federal government or churches.
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When do I need to be aware of the consolidated omnibus budget reconciliation act?
There are certain qualifying events that would allow a worker to utilize COBRA and continue to receive healthcare. Some qualifying events include reduced work hours, death, voluntary or involuntary loss of a job, divorce, and a job transition. To qualify, the worker would have to be enrolled in the employer’s health plan before the qualifying event occurred, and the health plan would have to be continuing for active employees.
What Is important to know about the consolidated omnibus budget reconciliation act?
Someone who qualifies for COBRA should understand his or her health care coverage isn’t going to continue exactly as before. There are some differences that should be expected:
- Most of the time, COBRA coverage extends between 18 and 36 months depending on the specific circumstances of the qualifying event.
- Coverage can be terminated early if premiums are not paid, the employer cancels the group health plan, a beneficiary qualifies for Medicare, and for a variety of other reasons.
- The employer does not pay for COBRA, so the worker could be required to pay up to 102% of the cost when administrative fees are added.