What is COBRA Insurance?
COBRA insurance (Consolidated Omnibus Budget Reconciliation Act) is a provision of health benefits which was made into a law by Congress in 1986. COBRA insurance by law amends the Public Health Service Act, the Internal Revenue Code and Employee Retirement Income Security Act (ERISA) to provide continued group health coverage that otherwise would be discontinued.
COBRA insurance has a provision which allows certain former employees, retirees, spouses and dependent children the right to the continuation of group rate health care coverage. However, the coverage is only available in certain situations.
COBRA group health coverage is on average more expensive than health coverage for active participating employees, mainly because the former employer paid a part of the premium. It can be less expensive than individual health coverage though.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) generally covers group health plans that are maintained by an employer with 20 or more employees in the previous year. The law applies to plans sponsored by state and local governments and those of the private sector. The law does not apply to plans that may be sponsored by certain church- related organizations as well as the Federal government.
Private sector employers generally sponsor group health plans that are welfare benefit plans which are governed by ERISA, and these types of plans are subject to its requirements for reporting and disclosure, fiduciary standards and enforcement. ERISA will not establish a minimum standard or any eligible benefits for welfare plans and it will not mandate level of type of benefits offered to the plan participants. ERISA does require that plans of these types have rules in place outlining how a worker becomes entitled to benefits.
Under COBRA insurance, group health plans are ordinarily defined as a plan that will provide medical benefits for an employer's own employees and their dependants through insurance or otherwise. These insurance benefits may include a trust, self-funded pay-as-you-go basis, health maintenance organization, reimbursement, or it may be a combination of these. In some cases surviving dependents can receive longer coverage.
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Physician care
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Surgery and other major medical benefits
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Inpatient and outpatient hospital care
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Prescription drugs
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Dental and vision care
COBRA is not covered under life insurance.
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