The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to continue their group health plan coverage in certain situations. Specifically, COBRA requires group health plans to offer continuation coverage to covered employees and dependents when coverage would otherwise be lost due to certain specific events, such as a termination of employment, a divorce or the loss of dependent status under the terms of the plan.
COBRA sets rules for how and when continuation coverage must be offered and provided, how employees and their families may elect continuation coverage and when continuation coverage may be terminated.
Who is a qualified beneficiary?
A qualified beneficiary is any individual who, on the day before the qualifying event, is covered under a health plan by virtue of being on that day either:
- An employee;
- A spouse of a covered employee;
- A dependent child of the covered employee*; or
- Any child who is born to or placed for adoption with a covered employee during a period of COBRA continuation coverage.
*A child covered under the plan pursuant to a qualified medical child support order (QMCSO) will also be a qualified beneficiary if he or she experiences a qualifying event.
Anyone who is covered under the plan by virtue of being an “employee” can be a qualified beneficiary entitled to COBRA if they meet the law’s other eligibility requirements. For this purpose, “employee” is not limited to common law employees and may include, for example, independent contractors covered under the plan.
Each qualified beneficiary has an independent right to elect COBRA. For example, if an employee and his or her spouse were covered under the health plan on the day before the qualifying event, the spouse may elect COBRA even if the employee declines coverage.