Security First Benefits

Employee and executive benefit plans for life insurance, disability insurance, major medical insurance, dental insurance, vision insurance, and retirement planning and financial investments.

Click here
to view your
benefit documents
online

COBRA - Consolidated Omnibus Budget Reconciliation Act

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives some former employees and retirees (and their spouses, former spouses, and dependent children) who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances. These circumstances include, but are not limited to, voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

COBRA amends the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and the Public Health Service Act regarding the continuation of employer-sponsored group health coverage that otherwise might be terminated. COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

The law applies to plans in the private sector and those sponsored by state and local governments. The law does not, however, apply to plans sponsored by the Federal government and certain church-related organizations.

Health care benefits provided under the terms of the plan and available to COBRA beneficiaries may include:

Inpatient and outpatient hospital care
Physician care
Surgery and other major medical benefits
Prescription drugs
Any other health care benefits, such as dental and vision care.

Life insurance, however, is not covered under COBRA.

COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice.

Jurisdiction

The Centers for Medicare & Medicaid Services, Department of Health and Human Services, has advisory jurisdiction with respect to COBRA as it applies to state and local governmental employers and their group health plans. The Employee Benefits Security Administration, Department of Labor, and the Internal Revenue Service, Department of the Treasury, share jurisdiction with respect to COBRA as it applies to private sector employers and their group health plans. The Office of Personnel Management has jurisdiction with respect to similar continuation of coverage provisions that apply to agencies of the Federal Government.

What You Need to Know

Individuals who work for a state or local government employer, and their dependents, should be aware of their rights regarding COBRA. Workers need to be aware of changes in health care laws to preserve their benefit rights. A good starting point is reading your summary plan description (SPD) booklet, if a state or local governmental employer distributes an SPD to its employees. Most of the specific rules on COBRA rights can be found there or with the person who manages your health benefits plan. Also, be sure to contact the health plan periodically to find out about any changes in the type or level of benefits offered by the plan.

Alternatives to COBRA Coverage

In deciding whether to elect COBRA continuation coverage, you should consider all your health care options. For instance, one option that may be available is "special enrollment" in a group health plan sponsored by a spouse’s employer, if enrollment is requested within 30 days of loss of your health coverage. (If you decide to elect COBRA coverage, special enrollment also is available in a spouse’s plan after COBRA continuation coverage is exhausted). The special enrollment right is provided by the Health Insurance Portability and Accountability Act (HIPAA). For more information about special enrollment rights under HIPAA, contact your state’s department of insurance, or visit the HIPAA Web site at http://www.cms.hhs.gov/hipaa1. If the group health plan provided by a spouse’s employer is a self-funded, private sector (not governmental) plan, contact the Employee Benefits Security Administration, Department of Labor. Also, individuals in a family may be eligible for health insurance coverage through various state programs. For more information about state programs, contact your state’s department of insurance.

Coverage After COBRA

If you elect COBRA continuation coverage, alternatives that may have been available to you before electing COBRA coverage may still be available after COBRA coverage is exhausted. Additionally, you and your family may qualify for individual health insurance coverage as "HIPAA eligible individuals" when COBRA coverage is exhausted. (COBRA coverage is exhausted when it ends for any reason other than either failure of the individual to pay premiums on a timely basis or for cause, such as making a fraudulent claim.) HIPAA eligible individuals are eligible for individual health insurance coverage on a guaranteed available basis with no exclusion period for preexisting medical conditions. Certain criteria must be met. For more information about obtaining individual health insurance coverage as a HIPAA eligible individual, please visit our HIPAA Web site at http://www.cms.hhs.gov/hipaa1 or contact your state’s department of insurance (preferably before your COBRA coverage ends).

Related Department of Labor Web pages:

Compliance Assistance: Provides publications and other materials to assist employers and employee benefit plan practitioners in understanding and complying with the requirements of ERISA as it applies to the administration of employee pension and welfare benefit plans.
Consumer Information on Health Plans: Provides fact sheets, booklets, and other health plan information from the Department's Employee Benefits Security Administration (EBSA).
Frequently Asked Questions: COBRA Continuation Health Coverage: Provides answers to commonly asked questions about COBRA.
Frequently Asked Questions for Participants & Beneficiaries Related to the Events of September 11th: Provides answers to the most frequently asked questions by workers and their families whose pension and/or health plan benefits have been impacted by the events of September 11, 2001.
Frequently Asked Questions for Reservists Being Called to Active Duty Related to their Pension and Health Benefits: Provides answers to the most frequently asked questions about pension and health benefits by National Guard and Reserve members being called to active duty as a result of the events of September 11, 2001.
Health Benefits Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) (PDF): Provides a detailed overview of the major provisions of COBRA.
Life Changes Require Health Choices (Español): Provides guidance on making health benefit decisions following key life events such as marriage or the birth or adoption of a child.
Pension and Health Care Coverage... Questions and Answers for Dislocated Workers: Provides answers to common questions asked by dislocated workers about their pension and health benefits.
Portability of Health Coverage (HIPAA) Frequently Asked Questions: Provides answers to questions including "what is HIPAA?" and "how does crediting for prior coverage work under HIPAA?"
Questions & Answers: Recent Changes in Health Care Law (PDF): Provides information about major provisions of the Health Insurance Portability and Accountability Act, the Newborns' and Mothers' Health Protection Act, the Mental Health Parity Act, and the Women's Health and Cancer Rights Act.
Top 10 Ways to Make Your Health Benefits Work for You - (Español): Provides information to help you make informed decisions about health plans.
Work Changes Require Health Choices (Español): Provides information on protecting your health care rights when your work life changes.
Your Employer's Bankruptcy: How Will it Affect Your Employee Benefits?: Provides information on bankruptcy’s effect on pension and group health plans.