What is the Consolidated Omnibus Budget Reconciliation Act (COBRA)?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan. COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end. COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice.
Texas State Continuation of Coverage (SCOC)
Texas law requires some group plans to continue coverage for an additional six months after COBRA coverage ends. For state continuation to apply, the plan must have been issued by an insurance company or HMO subject to Texas insurance laws and rules.
In addition, the insured must have been continuously covered under the group contract for at least three consecutive months immediately prior to the end of their employment. The termination may be for any reason except involuntary termination for cause.
If the insured is not eligible for COBRA coverage, they can continue the group coverage for nine months. The continuation period begins immediately after termination.
Note: State continuation applies only to group health benefit plans issued by insurance companies and HMOs that are subject to the Texas Insurance Code. State continuation does not apply to employer self-funded (ERISA) health care plans, which are exempt from state insurance laws.
If the insured has a disability that meets the standards of the Social Security Administration, the coverage period may be extended by an additional 11 months. State and federal law requires employers to provide information about continuation of coverage within 30 days from the end of employment. If the insured wants to continue their insurance coverage, they must notify the employer in writing no later than the 60th day after coverage was terminated.