A 1985 effort to deal with problem of the uninsured focused on circumstances that caused individuals to lose their coverage and provided them with a means of staying insured until they became covered under other group health plans. The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers that have group health insurance plans and at least twenty employees. They must offer continuation coverage to employees (and other beneficiaries) who experience qualifying events that would otherwise cause the loss of their health insurance.

Employees cannot simply be “dropped” from health plans without following COBRA’s procedures. The continuation coverage must be the same coverage enjoyed by employees who have not experienced a qualifying event. Information about COBRA rights must be provided to covered employees and their spouses and be included in health plan SPDs at the time health plan coverage begins. Employers must notify plan administrators of the occurrence of qualifying events within thirty days.

Because employers would not necessarily know of divorces, separations, or loss of dependent child status, employees or other beneficiaries are responsible for bringing these events to the attention of plan administrators within sixty days. After they are alerted that a qualifying event has occurred, plan administrators have fourteen days to offer continuation coverage. Notice should go to all adult beneficiaries, not just to covered employees.

Beneficiaries must be given at least sixty days from when their health coverage ends or from when they are notified of their COBRA rights, whichever is later, to elect continuation coverage and an additional forty-five days to make the first payment. Beneficiaries can be charged up to 102 percent of the cost to the employer of providing coverage under the group health plan. This is a major expense for most employees or their family members.

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