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What COBRA and ERISA mean for employees

Anyone who has received health insurance benefits from an employer in Texas has probably benefited — indirectly, at least — from the Employee Retirement Income Security Act of 1974. Some have also taken advantage of a prominent amendment to this federal law: the Consolidated Omnibus Budget Reconciliation Act.

The United States Department of Labor describes COBRA as a way for former employees to continue using their employer's healthcare plans. The details, including who qualifies for coverage under COBRA and when, are highly conditional on the insured person's situation. 

Insurance companies tend to offer policies at drastically lower rates to corporations than to individuals: It is an example of the economy of scale. Some less-reputable insurers do everything they can to prevent individuals from taking advantage of the discounted corporate rates, including the opposition of or refusal to fulfill policies under COBRA. This could, in some situations, be a violation of federal law.

According to the DOL, ERISA established, among other things, standards for employee healthcare plans. In a legal sense, this means that laborers are entitled to certain levels of health protections. Unfortunately, even if a company carries insurance policies that appear adequate on paper, the practical reality of this coverage might be significantly different from what is written in the documents. 

When an insurance carrier refuses to pay out for employee healthcare, it could potentially become everybody's problem and — similarly to refusing COBRA coverage — might constitute a breach of federal law. The DOL states that ERISA contains a formal appeals process, and also that it allows wronged parties to sue when this process fails. It could take time, but pursuing every avenue to completion is often the key to a successful dispute resolution. 

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Jon Michael Smith Attorney

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