Schaeffer Law’s attorneys frequently negotiate improved COBRA benefits as part of a severance package, or as benefits in employment agreements. We also advise and counsel clients concerning their entitlement to COBRA and other separation benefits.  In addition, we counsel employers on what their responsibility is insofar as COBRA is concerned, with respect to deadlines, minimums, and the administration thereof.

COBRA is a federal statute that stands for Consolidated Omnibus Budget Reform Act. It allows most former employees to remain covered under an employers’ health insurance plan, but these employees will usually have to pay more for it than they did while employed. Under COBRA the former employee is responsible for the entire premium for her health insurance, including both the portion of the premium that she paid during her employment and any portion that her employer paid. For example, if during her employment an employee paid $300 per month and her employer paid $700 per month for her health insurance, under COBRA the employee would pay $1,000 per month for her health insurance, and her former employer would pay nothing. The former employee will probably also have to pay an extra 2% of her premium as an administrative fee, which has been approved in the Act.

Former employees are not required to elect coverage under COBRA. In fact, an employee does not have COBRA coverage unless he or she actively signs up for it and tenders payment. Employers and insurance plan administrators are required to provide a departing employee with documents about COBRA within 44 days (30 for employer, then another 14 for the plan administrator) of the end of an employee’s employment; then the former employee generally has up to 60 days to decide whether she wants COBRA coverage. COBRA coverage generally lasts for up to 18 months; after that, the former employee will no longer be eligible for her former employer’s health plan.

A claim may arise under COBRA when a former employee cannot obtain COBRA benefits because the former employer or plan administrator does not send the necessary documents within 44 days or does not make the same benefits available to COBRA recipients that are available to current employees, among other violations. In addition, if an employee has been terminated as part of a company shutdown or mass layoff, his right to the value of lost health insurance benefits may be protected by the WARN Act.

Contact a COBRA lawyer at Schaeffer Law for counsel.