COBRA Continuation of Coverage
Source: https://www.dol.gov 11/1/2016
Throughout a career, workers will face multiple life events, job changes or even job losses. The continuation coverage provisions of COBRA — the Consolidated Omnibus Budget Reconciliation Act – help workers and their families keep their group health coverage during times of voluntary or involuntary job loss, reduction in the hours worked, transition between jobs and in certain other cases.♦ COBRA generally requires that group health plans offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.
- The law generally applies to all group health plans maintained by employers (private-sector and state/local government) that have at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. The law does not apply to plans sponsored by the Federal Government or by churches and certain church-related organizations.
- Several events that can cause workers and their family members to lose group health coverage may result in the right to COBRA coverage. These include:
- Termination of the covered employee’s employment for any reason other than gross misconduct;
- Reduction in the covered employee’s hours of employment;
- Covered employee becomes entitled to Medicare;
- Divorce or legal separation of the spouse from the covered employee;
- Death of the covered employee; or
- Loss of “dependent child” status under the plan rules.
- Under COBRA, the employee or family member may qualify to keep their group health plan benefits for a set period of time, depending on the reason for losing the health coverage. The following represents some basic information on periods of continuation coverage:
FACTSHEET: COBRA Continuation Coverage
Maximum Period of Continuation Coverage
Termination (for reasons other than gross misconduct) or reduction in hours of employment
Employee Spouse Dependent Child
18 months (In certain circumstances, qualified beneficiaries may become entitled to a disability extension of an additional 11 months or an extension of an additional 18 months due to the occurrence of a second qualifying event.)
Employee enrollment in Medicare
Spouse Dependent Child
36 months (The actual period of continuation coverage may vary depending on factors such as whether the Medicare entitlement occurred prior to or after the end of the covered employee’s employment or reduction in hours.)
Divorce or legal separation
Spouse Dependent Child
Death of employee
Spouse Dependent Child
Loss of “dependent child” status under the plan
♦ However, COBRA also provides that your continuation coverage may be cut short in certain cases.
- A general notice must be furnished to covered employees and spouses, within the first 90 days of coverage under the plan, informing them of their rights under COBRA and describing provisions of the law. COBRA information also is required to be contained in the plan’s Summary Plan Description (SPD).
- Under COBRA, the covered employee or a family member has the responsibility to inform the plan administrator of a divorce, legal separation, disability or a child losing dependent status under the plan.
- Employers have a responsibility to notify the plan administrator of the employee’s death, termination of employment or reduction in hours, Medicare entitlement, or bankruptcy of a private-sector employer.
- When the plan administrator is notified that a qualifying event has happened (by the covered employee or family member, or by the employer), it must in turn notify each qualified beneficiary of the right to choose continuation coverage.
- COBRA allows at least 60 days from the date the election notice is provided to inform the plan administrator that the qualified beneficiary wants to elect continuation coverage
- Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan. Premiums may be higher for persons exercising the disability extension provisions of COBRA. Failure to make timely payments may result in loss of coverage.
- Premiums may be increased by the plan; however, premiums generally must be set in advance of each 12-month premium cycle.
For More Information
The Employee Benefits Security Administration offers more information on COBRA on its Website,including Frequently Asked Questions for workers and employers and publications such as: