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

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the correct outcome for a terminated employee's benefits is that they must remain the same, and the premium cannot exceed 102% of the cost of the plan. COBRA is a federal law that allows employees to continue their health insurance coverage after they have lost their job or experienced a reduction in work hours. This provision is crucial as it ensures that the terminated employee retains the same benefits and coverage they had while employed, providing continuity in health care during a potentially vulnerable time.

The stipulation that the premium may not exceed 102% of the cost refers to the employee responsible for covering the premium for their continued coverage. This amount includes a 2% surcharge to account for administrative costs, keeping the coverage accessible while ensuring that the plan is self-sustaining for the provider.

Other potential scenarios, such as benefits changing due to new employment, being reduced, or converting to an individual plan, do not align with COBRA's aim of maintaining coverage for individuals at a similar benefit level. Therefore, the provision that the benefits should remain the same and that the premium must be within the specified limits aptly reflects the core intentions of the COBRA regulations.