In response to the growing concern over individuals who lost their health benefits upon termination from employment, the U.S. Congress enacted the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly referred to as COBRA. The law amended the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and the Public Health Service Act, and mandated that employers continue to offer health coverage at group health plan rates to certain former employees and their dependents upon termination from employment. Over the years COBRA has been amended by various acts, clarifying and amending the original COBRA continuation coverage requirements.
WHO ADMINISTERS THE PROGRAM
COBRA continuation coverage laws are regulated by several agencies. The U.S. Departments of Labor and Treasury have jurisdiction over private sector group health plans. The Department of Health and Human Services (HHS) administers COBRA continuation coverage law as it affects the public sector health plans (state and local government health plans).
The U.S. Department of Labor’s responsibility is limited to the disclosure and notification requirements of COBRA. The Internal Revenue Service, Department of Treasury, is responsible for issuing regulations on COBRA provisions relating to eligibility, coverage, and premiums. Both the Departments of Labor and Treasury share jurisdiction for enforcement of these provisions.
The Center for Medicare and Medicaid Services, within HHS, offers information about COBRA provisions for public sector employees.
In New York State, the Department of Financial Services regulates commercial insurance and has responsibility for administering NYS’s coverage continuation law. The Department provides guidance to employers and insurers and operates a Consumer Services Bureau to assist consumers.
In addition, the NY Attorney General Health Care Bureau will help consumers with problems and will go after systemic noncompliance with obligations for any insured plans in NY, both for COBRA and state continuation.
Summary of the COBRA Continuation Coverage
COBRA provides certain employees of certain employers, as well as their spouses and dependent children, the right to temporarily continue their former employer’s health coverage when that coverage would otherwise be lost due to certain specific events called qualifying events. Under federal COBRA law, eligible individuals who voluntarily resign from a job whose work hours are reduced or who are terminated for any reason other than “gross misconduct” are guaranteed the right to continue their employer’s group health coverage for up to 18 months, and, if disabled, for up to 29 months. In some situations, the spouse and dependent children of the eligible employee are entitled to up to 36 months of COBRA coverage. New York State law entitles people covered by insured plans issued in the state up to 36 months of coverage. For more details, see below, Description of COBRA Continuation Coverage, COBRA Coverage Periods.
COBRA health coverage is usually more expensive than health coverage for active employees because typically the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. COBRA coverage, however, may be less expensive than purchasing individual health coverage because COBRA premiums are based on group plan rates rather than individual plan rates. While there were subsidies available for COBRA coverage under the American Rescue Plan in the first years of the COVID-19 pandemic, and for individuals in the entertainment industry and who might otherwise qualify for Medicaid, there are no broad income-based subsidies available for COBRA coverage, as there are in the New York State of Health (Marketplace).
FEDERAL COBRA GUIDELINES
Under federal law, COBRA applies to any group health plan, whether the employer has purchased insurance coverage or is self-insured, where the employer generally had 20 or more employees in the prior calendar year. COBRA applies to health plans in both the private sector and public sector that is sponsored by state and local governments. It does not cover those sponsored by the federal government or certain church-related organizations. A law similar to COBRA covers federal employees; federal employees should contact the personnel office serving their agency for more information on extensions to their health benefits upon termination from employment.
NEW YORK STATE GUIDELINES
Individual states have the option of passing laws as part of their regulation of the insurance business that offer additional protection to employees under COBRA. These state continuation coverage laws are often called “mini-COBRA” laws. They apply only to health plans where the employer has purchased an insurance policy, and not to self-insured plans.
New York’s mini-COBRA law includes all insured groups in the state, including those not covered under federal law: employers with 2 to 19 employees, certain government plans, and church plans. It also includes some individuals not covered by federal COBRA law, such as individuals fired for gross misconduct and domestic partners and same sex spouses of employees.
NYS mini-COBRA extends continuation benefits for up to 36 months for all qualified beneficiaries. If a policy is subject to federal COBRA, but was issued in New York State, then New York law will provide additional months of continuation after federal COBRA expires, to bring the total to 36 months.