Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA requires group health plans to offer continuation coverage to
qualified beneficiaries, such as
covered employees, former employees, spouses, former spouses, and
dependent children when group health coverage would otherwise be lost due to
certain specific events, known as qualifying events. Those events include the
death of a covered employee, termination or reduction in the hours of a covered
employee’s employment for reasons other than gross misconduct, a covered
employee’s becoming entitled to Medicare, divorce or legal separation of a
covered employee and spouse, and a child’s loss of dependent status (and
therefore eligibility for coverage) under the plan.
COBRA sets rules for how
and when continuation coverage must be offered and provided, how employees and
their families may elect continuation coverage, and what circumstances justify terminating continuation
coverage.
COBRA
applies to single-employer group health plans maintained by employers with at
least 20 employees on more than 50 percent of its typical business days
in the previous calendar year. Both full- and part-time employees are counted
to determine whether a plan is subject to COBRA. Each part-time employee counts
as a fraction of a full-time employee, with the fraction equal to the number of
hours that the part-time employee worked divided by the hours an employee must
work to be considered full-time. COBRA applies to
multiemployer group health plans under which any of the employers contributing to the plans for a calendar year
normally employed 20 or more employees during the preceding calendar year.
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