COBRA is short for the federal Consolidated Omnibus Budget Reconciliation Act, which allows qualifying individuals who have lost their jobs to continue health coverage. COBRA insurance in the state of Michigan follows the same criteria that is provided by federal legislation. This means that when an individual is separated from an employer, he will be given the option to continue health insurance under COBRA for a period of 18 months.
Qualifying for Coverage
Individuals can qualify for COBRA continuation coverage by meeting three requirements. The first requirement is that an employer must have had more than 20 employees for COBRA to be available. The second requirement is that an individual must be covered by an employer's group health insurance plan. The last requirement is that a qualifying event must have occurred that caused a loss of group health insurance coverage.
Qualifying Events for Employees
Employees can experience a qualifying event for COBRA continuation coverage by having their employment terminated. This can be voluntary or involuntary for any reason other than gross misconduct of an employee. A qualifying event can also include a reduction in the number of hours worked by an employee.
Qualifying Evnets for Spouses
Spouses of an employee can experience a qualifying event for COBRA coverage for the same events for an employee. Additional qualifying events include a covered employee becoming eligible for coverage provided by Medicare and the death of a covered employee. A qualifying event for a spouse can also include divorce or separation from a covered employee.
Qualifying Events for Dependent Children
Dependent children of a covered employee can also experience a qualifying event for COBRA for the same event as a spouse. An additional qualifying event for dependent children is when they lose their status as an independent because of age or other reasons listed in the rules for the employee's group health insurance plan.
Notice Rules
Employees eligible for COBRA continuation coverage are required to be notified of their rights if they are eligible. When a qualifying event does not include divorce, separation or loss of dependent status an employer has 30 days to notify the group health insurance plan of the event. Employers have 60 days to send a notice to the group health insurance plan when a qualifying event includes divorce, separation or loss of dependent status.
Pre-Existing Conditions
Individuals with a pre-existing condition will not have a new exclusion period apply when beginning COBRA coverage. However, if a pre-existing exclusion period was not yet completed when a qualifying event occurred, the exclusion period will need to be completed before coverage is available for a pre-existing condition.
Premium Reduction
The American Recovery and Reinvestment Act, which was signed into law in February 2009, includes a premium reduction for individuals that are paying for COBRA continuation coverage. Individuals will pay 35 percent of the premium and a tax credit to providers will pay for the remaining 65 percent. Individuals can be eligible for the premium reduction if their job was lost between Sept. 1, 2008 and Dec. 31, 2009.
Tags: qualifying event, health insurance, group health, group health insurance, COBRA continuation, COBRA continuation coverage, continuation coverage
