COBRA Overview

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires most group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated.

COBRA requires continuation coverage to be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain events. Those events include the death of a covered employee, termination or reduction in the hours of a covered employee’s employment for reasons other than gross misconduct, divorce or legal separation from a covered employee, a covered employee’s becoming entitled to Medicare, and a child’s loss of dependent status.

Employers may require individuals who elect the continuation coverage to pay the Full cost of the coverage, plus a 2 percent administration charge. COBRA generally applies to all group health plans maintained by private sector employers (with at least 20 employees) or by state and local governments. COBRA doesn’t apply to plans by the Federal Government or by churches or church related organizations. Under COBRA, a group health plan is any arrangement that an employer establishes or maintains to provide employees or their families with medical care, whether it is provided through insurance, by a health maintenance organization, or otherwise. Medical care typically covered by a group health plan for this purpose includes: Inpatient and outpatient hospital care, physician care, surgery and other major medical benefits, prescription drugs, dental and vision care.

Federal COBRA applies to companies with 20 or more full time employees. If your employer has less than 20 full time employees, then the Tennessee continuation state law applies. Tennessee code 56-7-2312 provides that an employee or member whose insurance under the group policy has been terminated for any reason, except discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy, and under any group policy providing similar benefits that it replaces for at least 3 months immediately prior to termination plus 3 additional months upon payment in advance to the employer of the full group premium for this continuation of coverage.

COBRA requires that employers give notice to the terminated employees. There have been many cases litigating this issue and many have had bad results to the employers.

For more info, please call Cartwright Law LLC, 615.473.1006.

Will Cartwright

http://www.cartwrightlawllc.com