Castro & Associates Construction Trial Lawyers

Understanding COBRA coverage

For most in Los Angeles, access to health insurance comes through their an association with a private company (either through direct employment or being the covered beneficiary of an employee). Indeed, according to information shared bythe U.S. Census Bureau, as of 2018 nearly 68 percent of Americans were covered by a private health insurance plan. What happens, then, when such an association ends? Do an employee (as well as their beneficiaries) immediately cease to be eligible for coverage under the group health plan that the company sponsors? 

Not according to the provisions of the Consolidated Omnibus Budget Reconciliation Act. This is federal legislation that allows people to retain insurance coverage through a company that they no longer have any ties to for a specified period of time. This law was specifically meant to ensure that those who ceased to be eligible for insurance through an employer remained covered until they were able to enroll in a new plan. 

Per the U.S. Department of Labor, to qualify for continued coverage under COBRA, one must be enrolled in a plan that is subject to the Act's regulations. They are if their plan is sponsored by a private company (or a state or local agency) that employs more than 20 people. Next, they must have experienced a significant life event. For an employee, that is either a reduction or hours or the loss of their job due to anything other than their own gross misconduct. For covered beneficiaries, a qualifying event can be the aforementioned reasons as well as:  

  • Divorce 
  • Death of the covered employee
  • The covered employee becoming eligible for Medicare

Finally, one seeking COBRA coverage must have been eligible for coverage under the group plan the day prior to their significant life event occurring. 

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