COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is a federal law in the United States that allows employees to continue their group health insurance coverage for a limited period after leaving employment or experiencing certain qualifying events, such as termination of employment, reduction in hours, divorce, or death of the covered employee. COBRA coverage enables eligible individuals and their dependents to maintain access to the same health insurance benefits they had under their employer-sponsored plan, albeit at their own expense.
Under COBRA, employers with 20 or more employees are generally required to offer continuation coverage to eligible individuals and provide them with information about their rights and options. Qualified beneficiaries who elect COBRA coverage typically pay the full cost of premiums, plus a small administrative fee, to continue their health insurance benefits for a specified period, usually up to 18 or 36 months, depending on the qualifying event.
COBRA provides a safety net for individuals and families facing loss of health insurance coverage due to job loss or other life events, allowing them to maintain continuity of care and avoid gaps in coverage during transitional periods. However, COBRA coverage can be costly, as individuals are responsible for paying the full premium without employer subsidies, and failure to pay premiums on time may result in loss of coverage.
Employers must comply with COBRA requirements regarding notification, enrollment, premium payments, and coverage continuation to avoid penalties, lawsuits, or regulatory sanctions. Additionally, individuals considering COBRA coverage should carefully evaluate costs, coverage options, and alternative insurance options, such as marketplace plans or Medicaid, to make informed decisions about their healthcare needs and financial resources.
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