Until 1986, an employee who was fired, changed employment, or got divorced was at risk of immediately losing employer-sponsored health care coverage. In 1986, a federal law was passed that ensured continued coverage; this law is known as the Consolidated Omnibus Budget Reconciliation Act ("COBRA"). COBRA requires employers to offer employees and their families the opportunity for a temporary extension of health coverage under certain circumstances.
COBRA applies to public or private employers, including state and local government employers, who employ twenty or more employees and have done so for at least 50% of its typical business days in the previous calendar year. However, COBRA does not apply to plans sponsored by the federal government or church and some church-related organizations. Health insurance, vision, dental and prescription drug policies all fall under COBRA's provisions.
Payment of Premiums An employer may require an employee (or a dependent) who elects continuation coverage to pay the cost of the coverage and a 2% administrative fee. Because an employer usually pays a portion of the insurance premiums for its active employees, a person electing continuation coverage often pays more than active employees. |
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