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COBRA--Keeping Your Insurance After Your Job Ends

What are the meanings of the various terms used when talking about COBRA?

Group Health Plan--A plan that provides health care, health care insurance, or reimbursement for health care expenses to employees or their families. This includes both self-insured and fully-insured plans.

Employer--Under Federal COBRA laws, only employers with 20 or more employees (including self-insured employers, but not federal government or church plans) are required to offer COBRA continuation benefits. Under Minnesota state law, fully-insured employers with two (2) or more employees are required to offer continuation benefits. Minnesota law also applies to self-insured governmental agencies, but not to self-insured non-governmental employers. For more information on the difference between fully-insured and self-insured employers see the section of this website entitled Important Things to Know About Your Insurance Coverage.

Qualified Beneficiary--An individual who is covered by a group health plan on the date of a “qualifying event”, or whose coverage under the plan was dropped in anticipation of a qualifying event. The individual must be covered by the plan as:

• An employee;
• The spouse of an employee; or
• The dependent child of an employee—this includes children who are born or adopted during a COBRA continuation

Qualifying Event—One of the following events that would cause a qualified beneficiary to lose coverage under a covered group health plan, would give you the right to coverage under COBRA:

• An employee’s termination of employment (other than for gross misconduct);
• A reduction in an employee’s hours of employment;
• An employee’s death;
• An employee’s divorce or legal separation;
• An employee’s becoming entitled to Medicare benefits; or
• A dependent child’s ceasing to meet the plan’s dependency requirements.

Example: After Carol's cancer diagnosis, she decides to continue working for as long as she is feeling up to it. Carol is covered under her employer's group health plan as defined above. After two months, Carol decides she needs to voluntarily quit her job to focus on her health. Carol is then eligible for COBRA continuation coverage.

Applicable Premium--The total cost to the plan (whether paid by the employer or by employee) of the coverage provided to similarly situated active employees.