Continuation of Health Coverage (COBRA)

Outten & Golden attorneys routinely secure enhanced COBRA benefits as part of severance packages or within executive employment agreements. Additionally, we provide guidance on COBRA entitlement and other separation benefits.

COBRA, a federal statute, grants most ex-employees the option to retain their previous employer's health insurance coverage, though usually at a higher cost. Under COBRA, the former employee bears the full cost of health insurance premiums, including any portion formerly paid by the employer. As an example, if an employee contributed $250 per month while the employer covered $300 per month, under COBRA, the employee would be responsible for the entire $550 per month, plus an additional 2% as an administrative fee.

COBRA coverage is optional and only becomes active if the employee enrolls. Employers and insurance administrators must provide information about COBRA to the departing employee within 44 days of their departure. The ex-employee then has typically 60 days to decide on COBRA coverage, which usually lasts for up to 18 months.

COBRA-related issues may arise if the former employer or plan administrator fails to provide the necessary documents within 44 days, or if they don't offer identical benefits to COBRA beneficiaries as to current employees, among other violations. Such matters often emerge in relation to separation and termination agreements. Also, the value of lost health insurance benefits may be safeguarded by the WARN Act if an employee is dismissed due to a mass layoff or company closure.

We have prepared a set of FAQs to help understand how federal, state, and local laws safeguard your employment, wages, and livelihood. Feel free to contact us to discuss your situation at any time.