What does the acronym COBRA represent in employee benefits?

The acronym COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. This legislation was enacted in 1986 and provides certain former employees, retirees, spouses, and dependent children the right to temporarily continue health insurance coverage at group rates after experiencing a qualifying event that would typically result in the loss of such coverage. Qualifying events can include job loss, reduction in employment hours, transition between jobs, death, and divorce.

The act is important because it ensures that individuals have continued access to health insurance during times of transition without being subject to the immediate costs of obtaining individual coverage, which can often be significantly higher. COBRA requires employers to offer this continuation coverage and mandates strict notice and administration requirements, supporting employees and their families during challenging times.

This understanding is crucial for professionals in the field of compensation and benefits, as it directly relates to compliance and the management of employee health benefits.