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About Consolidated Omnibus Budget Reconciliation Act
Health insurance coverage is one of the most significant parts of our lives. It helps cover unforeseen medical expenses that may occur in life.
Most people get personal health insurance to help aid their medical expenses in the future.
However, there is insurance that is provided by the employers to their employees as well. But what happens if you are no longer working for that employer or lose your employment?
Well, this is where COBRA comes into the picture. In this post, we will learn what COBRA stands for and how it works.
What Is COBRA?
You might have heard about it before however, you might not be able to understand what it stands for. COBRA is the abbreviation for Consolidated Omnibus Budget Reconciliation Act.
This act was passed in 1985 in which the employees of a company can continue to use the group coverage provided by the employer in the event he or she retires, quit, or is fired from the company that provided this group health coverage.
Usually, group health coverage gives you better benefits compared to individual health coverage that you might choose.
You might be able to get the exact health insurance that you get from your employer directly from an insurance company, however, it is going to comparatively cost you more.
A large corporation usually spread the cost of the health insurance coverage among the group and hence you get the insurance at a lower cost.
So this act will help the individual to stay on the employer’s group health coverage plan even after that individual is not a part of the organization for up to a certain period at a low cost.
COBRA only applies to health plans offered by businesses private sector companies, state governments, and local governments with more than 20 employees.
It does not apply to health coverage benefits offered by the churches, certain church organizations, or the federal government.
An employee or their family may qualify for COBRA in case of voluntary or involuntary loss of employment, reduced working hours, employee’s death, or legal separation or divorce of the employee and his/her spouse.
How Does Consolidated Omnibus Budget Reconciliation Act Work?
If an employee is qualified for Consolidated Omnibus Budget Reconciliation Act, the employer must offer the eligible employee the opportunity to continue coverage under all health care plans like dental, vision, hearing plans, medical plans, substance abuse plans, mental health plans, and prescription drug plans that are offered to other regular employees.
However, the employer is not obligated to offer continuation coverage for disability insurance, life insurance, vacation plans, or retirement plans.
Usually, the qualifying beneficiaries can take benefit from COBRA coverage for a maximum of 18 months.
This period is extended to 29 months if the eligible beneficiary has dependants, or if he/she is disabled.
If an employee becomes eligible for Consolidated Omnibus Budget Reconciliation Act for a reason other than a layoff or layoff experiences a second qualifying event during the regular COBRA coverage period, then the period may be extended to 36 months.
Eligibility for Consolidated Omnibus Budget Reconciliation Act coverage generally begins the day after an employee is laid off or experiences any one of the qualifying events.
The eligible beneficiary gets at least 60 days to decide whether to accept or decline coverage.
If an employee elects to obtain COBRA coverage, the employer sometimes makes an initial payment.
After that, it is the beneficiary’s responsibility to pay premiums to keep the coverage in effect.
The employer can deny providing the continuation of the group health coverage for the employees who were fired due to misconduct at work.
Conclusion
If you are looking to get the benefits of the group health coverage in the event you lose your employment, Consolidated Omnibus Budget Reconciliation Act is the way forward for you till you find the next employment opportunity.
The employer must inform you about the act at the time of your joining so that you are aware of the qualifying guidelines for this act in case any events occur.
