New Jersey Life and Health State Practice Exam

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a terminated employee's benefits must:

1. Be reduced by 20%

2. Be the same and the premium cannot exceed 102%

3. Expire within 30 days

4. Be able to be transferred to a new employer

The correct answer is: Be the same and the premium cannot exceed 102%

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), when an employee’s employment is terminated, they are entitled to continuation of healthcare benefits. The law requires that these benefits remain the same as they were prior to termination, ensuring the individual retains access to the same coverage they enjoyed while employed. Additionally, the premium for these continued benefits cannot exceed 102% of the cost of the coverage. This structure is designed to provide a safety net for employees who may find themselves without a job and in need of medical care, allowing them to maintain their health insurance during a transition period. The 102% cap on the premium means that while the employee may have to pay a higher amount than what they were contributing as an employee, the increase is limited to a reasonable margin to cover administrative costs. This continuation of benefits and the specific premium guidelines under COBRA play crucial roles in protecting the health insurance coverage of employees after job loss or other qualifying events, making option B the accurate choice in this scenario.