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COBRA: Is Your Employer Subject to It?

Since Obamacare was signed into law, there’s been much talk of health care and employment. People have been arguing that small businesses will suffer from Obamacare and that the government is interfering with small businesses and employment by mandating health coverage.

What many don’t realize is that the government had its hands in health care for years, when it passed a law called COBRA.

COBRA or the Consolidated Omnibus Budget Reconciliation Act, is very important for people to know — both for employers and for employees. It’s an extension of health coverage that certain employees are entitled to, in the event that they lose their job.

Under COBRA, certain former employees and their dependants can benefit from a temporary continuation of their old health care coverage at group rates.

But note that it only applies to "certain" businesses and to "certain" employees.

A discussion on COBRA is a lengthy discussion and this post will focus on which employers COBRA applies to.

COBRA applies to group health plans sponsored by employers normally employing more than 20 employees on a typical business day in the preceding calendar year. This can get tricky, since each full-time employee is counted as one and each part-time is counted as a fraction, pro-rated to their hours worked.

Only employers offering a "group health plan" are subject to COBRA. A group health plan is a plan that provides health care to employees. This is either directly, through an onsite facility, insurance, or reimbursement. It can also be or indirectly through a cafeteria plan or other flexible benefit arrangement.

COBRA is an area of law that is complex and full of tiny details. Have a look at the related resources below for more information.

Related Resources: