The Consolidated Omnibus Budget Reconciliation Act of 1985 is a law passed by the U.S. Congress on a reconciliation basis and signed by President Ronald Reagan that, among other things, mandates an insurance program that gives some employees the ability to continue health insurance coverage after leaving employment.
COBRA takeover occurs when companies switch their administrator. Typically, they are used during mergers and acquisitions. Employers considering a merger or acquisition should consider consulting an attorney to include the right COBRA language in the M&A contract.
If one company acquires another, the first company may take the responsibility for coverage for employees instead of the second company. However, if the original company sells its business or goes bankrupt, the second company would then be responsible for employee benefits.
COBRA applies to individuals whose coverage ended through a qualifying life event that causes the individual to lose their health coverage.
Qualifying events include: