Health Insurance Continuation (COBRA): What you need to know

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is intended to ensure that employees and their dependents can maintain their group healthcare coverage following certain events that otherwise would result in termination of coverage. COBRA’s protections are temporary and are intended as a stopgap until insurance is obtained from another source, such as a new employer. Employers do not have to pay for any portion of the premiums for COBRA coverage, but the beneficiaries get to maintain their insurance at less expensive group rates.
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COBRA requires group health plans sponsored by covered employers to allow qualified beneficiaries to have "COBRA continuation coverage" in the event that they lose group health plan coverage for specified reasons. COBRA applies only to employers who had 20 or more employees on more than 50 percent of typical business days during the prior calendar year. In some situations, insured employees have continuation rights under both federal and state law. In such cases, employees may choose the more favorable law. Under both federal and almost all state laws, continuation requires the insured to pay the full premium (including the former employer's share), but the insured does get the advantage of cheaper group rates.
Federal COBRA continuation does not apply to any employer-sponsored group health plan if the employer normally employed fewer than 20 employees during the prior calendar year. An employer is considered to have normally employed fewer than 20 employees during a particular calendar year if it had fewer than 20 employees on at least 50 percent of its typical business days during that year. When counting ...

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