Losing a job is one of life’s most stressful events. Without a steady income, you may be concerned about paying your bills, supporting your family and affording health care insurance.

However, the federal government created a system of temporary, continued medical benefits for past-employees. The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows certain employees to retain their group health care coverage, typically for 18 months. How does COBRA work?

Are all employers required to offer COBRA benefits?

Employers with 20 or more employees for over half of last year’s business calendar are required to offer COBRA to departing employees. However, the employee is required to pay the plan premium previously covered by the employer, so their health care expenses are likely to increase.

Are all departing employees eligible for coverage?

No. If you are fired from your role for gross misconduct, you are not eligible for COBRA benefits. However, employees who are laid off from work, lose health insurance due to a reduction of hours, retire or voluntarily leave the company are typically eligible for benefits. You must have been on your past-employer’s group health care plan up until your termination of employment to qualify.

In addition to the past employee, spouses and dependents can secure coverage as well. A spouse may also collect benefits if their spouse dies, or if they divorce a covered employee. To qualify, you must notify the plan administrator within 60 days of the divorce or loss of a spouse.

Are employers required to notify employees of COBRA eligibility?

Every company has a responsibility to inform the plan administrator of their employee’s lack of coverage, and the plan administrator will reach out to offer benefits. If a company fails to notify the plan administrator, and the employee is never notified of their right to COBRA benefits, they may be able to take legal action against their past employer.