Philadelphia Employment Law News

Lost Your Job? You May Still Have Health Coverage Under COBRA

For many, being unemployed means losing out on one's health insurance benefits. While that may be the case over the long term, there is something called COBRA, which extends your current health care coverage in the case of certain life events, including unemployment.

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It was passed as part of ERISA -- The Employment Retirement Income Security Act, which is part of the Tax Code.

The key thing to know about COBRA is that it applies to certain (not all) employers and extends health care coverage temporarily to certain former employees (again, not all).

Not everyone is covered under COBRA. And not everything is covered under COBRA. But the good thing for those who are covered is that it buys them time to look for new coverage without losing the old coverage.

COBRA doesn't apply to all employers, so who does it apply to?

To start, it applies to employers of a certain size. This includes employers normally employing more than 20 employees. By that, the law states that the employers should typically have at least 20 employees working on any given business day during the preceding calendar year.

Second, the employer must offer a "group health plan". Only employers offering such plans must abide by the laws of COBRA. For the employer, this means that they must make certain disclosures to employees on their rights under COBRA. A failure to let employees know about COBRA can subject an employer to stiff penalties.

Going back to the "group health plan," it's a plan that provides health care to employees, either directly or indirectly.

So the basic rule is this: If you lose your job through no fault of your own, your employer has over 20 employees on any given day and your employer offers a group health plan, you might be eligible for an extension of your health coverage under COBRA.

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