Continued Health Insurance Made Available Through Federal Law, COBRA
When an employee is terminated or resigns from their job Federal COBRA law requires most employers to continue to make the current group health insurance available to workers. All employees who are discharged as a result of voluntary or involuntary termination, such as for: negligence, poor performance, or inefficiency (with the exception of those who are terminated for gross misconduct), may opt to continue plan benefits currently in effect at their own cost, provided the employee or beneficiary makes the first payment within 30 days of notification and is not covered under Medicare or any other group health plan. The law also applies to qualified beneficiaries who were covered by the employer’s group health plan the day before the discharge. For example, if the employee decides not to continue coverage, her spouse and dependent children can elect continued coverage at their own expense.
The extended coverage period is 18 months upon termination of the covered employee; upon the death, divorce, or legal separation of the covered employee, the benefit coverage period is 36 months to spouses and dependents.
The law requires that employers or plan administrators independently notify all employees and covered spouses and dependents of their rights to continued coverage. After receiving such notification, the individual has 60 days to decide to continue coverage. Moreover, employees and dependents whose insurance is protected under COBRA have to be provided with any conversion privilege otherwise offered in the plan (if such coverage exists) within a six-month period prior the date on which coverage would terminate at the end of the continuation period.
A number of employers run afoul of the law in failing to adhere to the rules regarding notification requirements, excluded individuals, conversion privileges and time restrictions. In the event the employer fails to offer such coverage, the law imposes penalties ranging from $100 to $200 per day for each day the employee is not covered and other damages.
However it’s important to note that you cannot attain benefits if you are fired for gross misconduct. This term is relatively ambiguous; the burden of proof is on the employer to prove that the discharge was for a compelling reason (such as starting a fight or stealing).
If an employer reduces your working hours to a point that makes you ineligible for group health coverage, refuses to negotiate continued health benefits as part of a severance package, or fails to notify you of the existence of such benefits or if the employer refuses to offer continued COBRA benefits after a discharge for any reason, consult an experienced California labor law attorney immediately.
Tip: Know your COBRA rights before accepting any job and in the event you resign or are fired. This is particularly true if you or a spouse or dependent is sick and needs the insurance benefits to pay necessary medical bills. You are entitled to such protection even if you have worked for the employer for a short period of time. Most short-term employees can generally enjoy COBRA protection for periods exceeding the length of their employment. The only requirement is that you must have been included in the employer’s group plan at the time of the firing and that the employer was large enough (i.e., employed 20 or more
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