COBRA continuation coverage is best described as a federal law that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to group health plans of employers with 20 or more employees. After a qualifying event — termination of employment (except for gross misconduct), divorce, death of the employee, or loss of dependent status — qualified beneficiaries may continue their group coverage for a limited period by paying the full group premium, usually up to 102% of the plan's cost. COBRA does not require employers to offer coverage, does not cap premiums, and does not obligate the employer to keep subsidizing the coverage.
Why the other options are wrong
- B) COBRA contains no employer mandate to offer coverage; it regulates the continuation rights of plans that already exist. It governs only the continuation rights of plans that already exist today.
- C) Premiums are set through insurer rating and plan design, not by a COBRA premium cap. COBRA is not a premium-regulating statute at all; premiums instead follow insurer rating rules.
- D) Under COBRA the departing employee pays the premium; the employer's obligation is to make continuation available, not to keep funding it. The departing employee bears the full cost of the continuation coverage.
Memory hook
COBRA = keep your group coverage after the job ends — but you pick up the full tab. 102 cents on every dollar, roughly.