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COBRA benefits can come at a high cost to employee

Many Texas employees enjoy employer-provided group health insurance coverage. The allowed coverage may also include coverage for spouses and other family members. The value of such health insurance can be invaluable. However, grave concern can arise about loss of coverage when an employee is no longer covered by the employment related health insurance.

The federal law known as ERISA provides for the basic rights and responsibilities required for employees and employers when an employer provided health insurance policy benefits an employee. A related law known as Consolidated Omnibus Budget Reconciliation Act, takes ERISA protections further.

COBRA provides that under certain circumstances, an employee who loses employment may continue to receive that health insurance coverage that he or she would otherwise lose. This right to continued health insurance coverage can extend to spouses, children and other covered family members.

Specific covered events

As noted by the Department of Labor, some circumstances that can cause a covered employee or his dependents to lose active employee health coverage that receive protection under COBRA include the following:

  • The death of the employee
  • The firing or laying off of the employee, with some exceptions
  • The loss of work hours constituting the minimum required for health insurance coverage
  • Divorce
  • Entitlement to Medicare
  • A child reaching the age of majority or losing dependent status

Under these kinds of life events, COBRA allows the employee and dependents to choose to continue the same health plan benefits.

COBRA costs

However, it can come at a significant cost because the employer need not pay for the COBRA coverage. This is so even if the employer pays a part of the health insurance premiums for active employees or their covered dependents.

Under COBRA, the employer requires that the employee pay the entire premium as well as an additional 2 percent of that cost as an administrative charge. As such, COBRA is often unaffordable to a former employee, particularly one who is no longer bringing in a working income.

Nonetheless, for others, COBRA coverage, despite its expense, may be a necessary choice. It can be lifesaving for a former employee or his or her dependent who has expensive medical conditions requiring costly treatments or prescription medication.

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