Consolidated Omnibus Budget Reconciliation Act (COBRA)

What does COBRA stand for in healthcare?

In healthcare, the acronym COBRA references the Consolidated Omnibus Budget Reconciliation Act. 

 

What is the Consolidated Omnibus Budget Reconciliation Act (COBRA)? 

The Consolidated Omnibus Budget Reconciliation Act was a federal act that Congress passed in order to amend the Public Health Service Act, the Internal Revenue Code, and the Employee Retirement Income Security Act (ERISA). Passed in 1985, the Consolidated Omnibus Budget Reconciliation Act is an important landmark law that makes it mandatory for employers to provide employees with group plan health benefits for a certain period of time given particular circumstances which can include involuntary unemployment, voluntary unemployment, employee death, job transition, decreased work hours, separation of employee and their spouse, or other important life events. 

A group health plan is a healthcare plan which grants healthcare benefits for the employee as well as any of their dependents which can include spouses and children. Unfortunately, the healthcare benefits provided by COBRA are not free – there is a cost for these extended healthcare benefits. The employee must pay the monthly premium payment for the continued healthcare coverage, which is often more expensive than the value paid while working, unless the employee is covered by the American Rescue Plan Act. For clarification purposes, the American Rescue Plan Act, passed in 2021, is an act that requires the federal government to cover the COBRA premium payments for an employee and their immediate family if the employee lost their job as a result of the COVID-19 pandemic. The American Rescue Plan Act can be applied from April 1st of 2021 to September 30th of 2021. 

It is important to know that COBRA healthcare coverage benefits only last up to eighteen months. It is possible to have this time frame extended, but this is done so at the discretion of the employer. Additionally, the Consolidated Omnibus Reconciliation Act applies only to healthcare plans which are offered by local government, state government, and companies, organizations, or businesses with twenty or more employees. 

Unfortunately, the Consolidated Omnibus Reconciliation Act of 1985 does not apply to healthcare plans offered within the federal government or church-related establishments. To quickly summarize all of that information, the Consolidated Omnibus Reconciliation Act grants workers and their families the right to continue group healthcare plans which would otherwise be discontinued for a short period of time at an elevated cost.  

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