The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a law passed by the U.S. Congress on a reconciliation basis and signed by President Ronald Reagan that, among other things, mandates an insurance program which gives some employees the ability to continue health insurance coverage after leaving employment.
The law deals with a great variety of subjects, such as tobacco price supports, railroads, private pension plans, emergency department treatment, disability insurance, and the postal service, but it is perhaps best known for Title X, which amends the Internal Revenue Code and the Public Health Service Act to deny income tax deductions to employers (generally those with 20 or more full-time equivalent employees) for contributions to a group health plan unless such plan meets certain continuing coverage requirements.
However, the legislation was subsequently amended to instead impose an excise tax upon an employer whose health plan fails to satisfy the applicable rules.
[a] Among the "qualifying events" listed in the statute are loss of benefits coverage due to (1) the death of the covered employee; (2) an employee loses eligibility for coverage due to voluntary or involuntary termination or a reduction in hours as a result of resignation, discharge (except for "gross misconduct"[4][5]), layoff, strike or lockout, medical leave, or slowdown in business operations; (3) divorce or legal separation that terminates the ex-spouse's eligibility for benefits; or (4) a dependent child reaching the age at which he or she is no longer covered.
COBRA does not, unlike other federal statutes such as the Family and Medical Leave Act (FMLA), require the employer to pay for the cost of providing continuation coverage.
Employers subject to Federal COBRA are required to:[18] This Act was signed into law by President Barack Obama on February 17, 2009.
The Act extends COBRA subsidy eligibility to employees who lost their jobs due to no fault of their own between January 1 and February 28, 2010.
[24] As of June 2010, an extension of COBRA's premium assistance has not materialized, and attempts by congressional members to include such provisions have been dropped.
[25] This is due in part to conservative Democrats in Congress who have expressed concerns about treating some unemployed workers differently from others, such as people priced out of the private insurance market.
[citation needed] The American Rescue Plan Act of 2021 included a provision to fully cover COBRA premiums from April through September 2021.
[26] Forty-one states have legislation similar to federal COBRA requiring employers to allow employees and their dependents to continue their group health insurance coverage following certain qualifying events.
California's legislation applies to non-government employers with a group health insurance plan with fewer than twenty employees.