Employees Retirement Income Security Act/COBRA
The Employee Retirement Income Security Act ("ERISA")(29 U.S.C. §1001) protects pension benefits and welfare benefit plans (such as employer-provided health insurance plans) from abuse by the entity in charge of the plan(s) - the "plan administrator."
Generally, ERISA describes the fiduciary (caretaker) responsibilities of plan administrators, and prohibits misuse of pension funds; and provides rules for pension participation, funding, vesting, investing of pension funds, and financial reporting of pension fund activities. COBRA ("Consolidated Omnibus Budget Reconciliation Act") is a part of ERISA that protects employees from the loss of health insurance and similar employer-provided "fringe" benefits, when separation from employment or other triggering "event" (such as divorce, when one spouse is covered under the health insurance policy of the other).
Plans that qualify for loss protection under COBRA include "medical, sickness, accident, disability and death benefits, training programs, day care centers, scholarship funds, and legal services," as well as plans that provide severance, vacation and other "fringe" benefits. Generally, upon the occurrence of a triggering event, an employer must notify the covered person of their right (and how) to continue the health insurance maintained by the employer, at approximately the cost paid by the employer for the insurance, for up to 18 months or until alternative coverage is obtained. The employer's failure to provide the required notice of COBRA rights could subject the employer to statutory penalties, including a penalty of up to $100 per day for each day that notice is not provided, as well as an award of the legal fees and expenses of civil litgation.