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Health Care Reform:

Health Insurance & Affordable Care Act

Health Benefits Under the COBRA

What Is the Continuation Health Law? continued...

Group health plans sponsored by private sector employers generally are welfare benefit plans governed by ERISA and subject to its requirements for reporting and disclosure, fiduciary standards and enforcement. ERISA neither establishes minimum standards or benefit eligibility for welfare plans nor mandates the type or level of benefits offered to plan participants. It does, however, require that these plans have rules outlining how workers become entitled to benefits.

Under COBRA, a group health plan ordinarily is defined as a plan that provides medical benefits for the employer's own employees and their dependents through insurance or another mechanism such as a trust, health maintenance organization, self-funded pay-as-you-go basis, reimbursement or combination of these. Medical benefits provided under the terms of the plan and available to COBRA beneficiaries may include:

  • inpatient and outpatient hospital care
  • physician care
  • surgery and other major medical benefits
  • prescription drugs
  • any other medical benefits, such as dental and vision care

Life insurance, however, is not covered under COBRA.

1. The original health continuation provisions were contained in Title X of COBRA, which was signed into law (Public Law 99-272) on April 7, 1986.
2. Provisions of COBRA covering state and local government plans are administered by the U.S. Public Health Service within the Department of Health and Human Services.

Who Is Entitled to Benefits?

There are three elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, beneficiaries and events which initiate the coverage.

Plan Coverage

Group health plans for employers with 20 or more employees on more than 50 percent of the working days in the previous calendar year are subject to COBRA. The term "employees" includes all full-time and part-time employees, as well as self-employed individuals. For this purpose, the term employees also includes agents, independent contractors and directors, but only if they are eligible to participate in a group health plan.

Beneficiary Coverage

A qualified beneficiary generally is any individual covered by a group health plan on the day before a qualifying event. A qualified beneficiary may be an employee, the employee's spouse and dependent children, and in certain cases, a retired employee, the retired employee's spouse and dependent children .

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