Tennessee Insurance Practice Exam

What is the primary purpose of COBRA regulations regarding group health insurance?

1. To increase coverage options for employees

2. To provide a temporary extension of health benefits

3. To limit the costs of health insurance

4. To enforce employee contributions to health plans

The correct answer is: To provide a temporary extension of health benefits

The primary purpose of COBRA regulations, which stands for the Consolidated Omnibus Budget Reconciliation Act, is to provide a temporary extension of health benefits. Under COBRA, employees and their dependents who lose their group health insurance due to specific qualifying events—such as job loss, reduction in hours, or other life events—are allowed to continue their group health insurance coverage for a limited time, generally up to 18 months, and sometimes longer in specific situations. This provision is significant because it helps ensure that individuals and families do not experience a gap in their healthcare coverage during transitions or unforeseen circumstances. This can be critical for maintaining access to necessary medical care, as losing a job or experiencing other qualifying events can lead to considerable financial and health-related stress. The other options, while relevant to the broader topic of health insurance, do not capture the essence of COBRA's primary purpose. For instance, increasing coverage options for employees pertains more to the variety of plans offered rather than the continuation aspect that COBRA emphasizes. Similarly, limiting costs and enforcing employee contributions are more about the financial mechanics of plans rather than the protective measures COBRA is designed to provide for those losing their insurance coverage.