Health Insurance Page 2: COBRA Coverage

From Page 1: Employee Health Insurance

COBRA laws were enacted to protect workers in the event their insurance coverage abruptly ended, leaving them without any healthcare coverage.  The federal level law mandates employers of twenty or more individuals must make insurance available to former workers, but do not have to pay for the coverage in any form.  Persons covered by federal COBRA laws will include:

  • All former employees previously receiving healthcare coverage from employer’s provider
  • All beneficiaries under this policy, including dependents and spouses

Under COBRA, qualified former workers may receive up to eighteen months of continued coverage in the event they are no longer eligible otherwise or have left the company.  Disabled individuals, including employees who become disabled while receiving COBRA benefits can receive coverage for up to twenty-nine months. 

In addition, COBRA laws provide for the continued coverage of child dependents of a worker following their initial loss of benefits.  Typically, COBRA coverage continues for eighteen months for child dependants, but the coverage can be increased to thirty-six months in a number of cases, including:

  • Covered employee becomes eligible for Medicare
  • Covered employee dies
  • Child turns eighteen or age no longer considered dependant under plan
  • Dependent is disabled and eligible for Social Security benefits

Additionally, COBRA coverage allots for persons possessing the dreaded label of “pre-existing condition”.  Under COBRA, no individual can be denied coverage due to a pre-existing condition. 

How COBRA Is Enforced

Enforcing your rights under COBRA is provided for by a litany of fines and potential criminal penalties noted in the act.  In theory, this makes sense.  However, due to the complex nature of the program, as well as the fact that the Department of Labor and the Internal Revenue Service both handle parts of violation claims, many individuals report never seeing their complaints resolved.  For persons wanting more information on their COBRA rights, their company is required to provide these materials, and checking in with your local office of the Department of Labor may be helpful.  In practice, however, rectifying violations of your COBRA rights may prove more expensive than it is worth, due to the necessity to file suit.  In instances of large groups of employees filing suit against one company, a class action type suit is very feasible financially.

Continuing Personal Health Insurance

Some states do offer individuals the right to convert their past group coverage benefits into an individual healthcare coverage plan.  Though individual insurance coverage is generally much more expensive and limits the total lifetime amount of coverage, individuals do not have to lose their job to elect to convert from group coverage to individual policies.  These laws are detailed on a state-to-state basis; but in general, prove very helpful in the event a company elects to stop providing healthcare coverage to their current employees as a cost cutting measure, which has occurred frequently in the past two years. 

Additionally, state level laws regarding health insurance coverage for former workers are much more enforceable than COBRA laws in most cases.  Likewise, state level continuations of health care coverage laws have unique amendments facilitating more access to coverage for at risk groups including the elderly and dependents of workers.


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