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Simple English definitions for legal terms
Consolidated Omnibus Budget Reconciliation Act (COBRA)
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A quick definition of Consolidated Omnibus Budget Reconciliation Act (COBRA):
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a law that helps people keep their health insurance when they lose their job or have a change in their work situation. If someone was part of a group health plan at their job and they have a qualifying event like losing their job or getting divorced, they can choose to keep their health insurance for a certain amount of time. They have to pay for it themselves, but it's usually cheaper than buying insurance on their own. COBRA only applies to certain employers and the coverage lasts for up to 18 months, but it can be extended in some cases.
A more thorough explanation:
The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, is a federal law that allows employees and their families to continue their group health benefits under an employer's group health plan if their work situation changes. This means that if an employee loses their job, has their hours reduced, or gets divorced and loses coverage, they can still have access to health insurance through their former employer's plan.
For example, if John loses his job, he can choose to continue his health insurance coverage through COBRA. He will have to pay the full premium for his coverage, but he will still have access to the same health benefits he had while he was employed.
COBRA only applies to group health plans offered by private-sector employers with more than 20 employees, as well as state and local governments. It does not apply to the federal government.
Employers are required to notify eligible employees of their right to continued coverage under COBRA, and employees have 60 days to decide whether to waive coverage or not. The continued coverage under COBRA lasts for 18 months, but it may be extended to 36 months under certain circumstances.
The purpose of COBRA is to ensure that employees who lose their jobs receive health insurance benefits. While the cost of coverage under COBRA can be high, it is often less expensive than coverage an individual would find on the open market.