What is Cobra and Does it apply to me?

COBRA is short for The Consolidated Omnibus Budget Reconciliation Act and requires some employers to extend certain employee benefits to employees after their termination.

The law requires that private-sector employers with 20 or more employees offer COBRA to terminated employees, their spouses, and dependent children. Not offering benefits through COBRA to terminated employees can result in steep fines from the IRS.

Employees who elect COBRA will be enrolled in the same plans as active employees but will pay a higher premium for these plans since employers are not required to pay a portion of terminated employee’s benefits. Terminated employees will be extended the option to enroll in coverage under COBRA for a period of 18 or 36 months. The length of time depends on the type of qualifying event that led to their loss of coverage.

Most employers who are required to offer COBRA will opt to use a third party to administer their COBRA plans. A Third Party Administrator (TPA) will ensure that premium is collected, and all notices are sent in the required time frame to the terminated employee.