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What is the Consolidated Omnibus Budget Reconciliation Act?

The Consolidated Omnibus Budget Reconciliation Act is more often referred to as COBRA, and it is an addition to the Employee Retirement Income Security Act of 1974. ERISA protects certain benefits of qualifying employees, and COBRA extended that protection to health care coverage.

Specifically, COBRA provides a path for individuals who lose health care coverage temporarily to pay for and receive health care coverage. COBRA typically comes into play when someone experiences a temporary loss in coverage associated with loss of work or because another working person with coverage experiences a change.

For example, if you are working and have coverage through your employer, but economics require the employer to convert your position to part-time, you might lose full-time benefits. Another time when someone might lose health care is if they have relied on a spouse’s employer-provided plan and they go through a divorce.

COBRA coverage means that the employer-provided group plan must extend a benefits option to the an individual who would no longer be eligible for coverage as an employee. The extension of coverage is temporary and is contingent on the employee making appropriate premium payments each month or as agreement upon. Usually, you end up paying the amount that was withheld from your check each pay period for health insurance plus the amount your employer was covering for the same time.

While COBRA coverage can be expensive for some, it offers a way to extend coverage until you can seek other options. If you feel like you should be offered COBRA coverage after losing health insurance, but you are being denied this option, then consider speaking with an employment law or insurance law attorney for assistance.

Source: United States Department of Labor, “Health Plans & Benefits: Continuation of Health Coverage – COBRA,” accessed May 19, 2016

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