The Consolidated Omnibus Budget Reconciliation Act — gives employees the right to continue group health coverage for up to 18 months after a qualifying event.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) gives employees and their dependents the right to temporarily continue group health insurance coverage at their own expense (up to 102% of the full premium) after a qualifying event such as voluntary or involuntary termination, reduction of work hours, divorce, death of the covered employee, or a dependent child aging out of the plan.
COBRA applies to employers with 20 or more employees on at least 50% of typical business days in the prior calendar year. The standard continuation period is 18 months for termination or reduction in hours, extending to 36 months for certain dependent qualifying events. Several states (CA, NY, NJ, TX, and others) have 'mini-COBRA' laws extending similar rights to employees of smaller employers not covered by federal COBRA.
Employers (or their plan administrators) must send a COBRA election notice within 14 days of being notified of a qualifying event. Failure to provide proper notice can result in penalties of up to $110 per day per qualifying beneficiary under ERISA, plus excise tax under the Internal Revenue Code. Most employers outsource COBRA administration to a third-party administrator for compliance reliability.
After her layoff, Sarah elected COBRA to continue her health plan for 18 months while she searched for a new role.
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