The Consolidated Omnibus Budget Reconciliation Act of 1985 (or COBRA) is a law passed by the U.S. Congress on a reconciliation basis and signed by President Reagan that, among other things, mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment.

An individual covered under COBRA may also be covered by another group health plan or Medicare as long as one of two conditions are met:

* The other coverage was in force as of or prior to the coverage under COBRA, or,

* The other coverage is subject to pre-existing conditions exclusions or limitations.

Employers subject to Federal COBRA are required to:

* Notify terminated employees of their potential rights under ARRA by sending a series of notices

* Provide a method for qualified AEIs to enroll

* Pay the full amount of the premiums and seek reimbursement of the 65% subsidy by including it in the Employer’s Quarterly Federal Tax Return (Form 941)

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