The law generally requires that group health plans sponsored by employers with 20 or more employees in the prior year 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.

COBRA applies to plans both in the private sector and those sponsored by state and local governments. Provisions of COBRA covering state and local government plans are administered by the Department of Health and Human Services.

Events that may result in the right to Continuation Coverage

Several events that can cause workers and their family members to lose group health coverage may result in the right to Continuation Coverage. These include:

  • Voluntarily or involuntary termination of the covered employee for reasons other than gross misconduct
  • Reduced hours of work for the covered employee
  • Covered employee becoming entitled to Medicare
  • Divorce or legal separation of a covered employee
  • Death of a covered employee
  • Loss of status as a dependent child under plan rules

Under the law, employees and family members may qualify to keep their group health plan benefits for a set period of time, depending on the reason for losing the coverage.

Periods of Continuation Coverage

  • 18 Months Continued Coverage: For employees, spouses and dependents if the qualifying event is due to termination or reduced hours (This 18month period may be extended for all qualified beneficiaries, if certain conditions are met, in cases where a qualified beneficiary is determined to be disabled for purposes of the COBRA law.
  • 36 Months Continued Coverage: For spouse or dependent child if an employee is entitled to Medicare, if there is a divorce or legal separation, if an employee dies, or when a dependent child reaches the age of majority.

However, the law also provides that Continuation Coverage may be cut short in certain cases. 

Notification Requirements

An initial notice must be furnished to covered employees and spouses, at the time coverage under the plan commences, 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. When the plan administrator is notified that a qualifying event has happened, 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.

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, reduction in hours, or Medicare entitlement. 

If covered individuals change their marital status, or their spouses have changed addresses, they should notify the plan administrator.

Premium Payments

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 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 12month premium cycle.

Individuals subject to continuation coverage may be responsible for paying all costs related to deductibles, and may be subject to catastrophic and other benefit limits. 

We offer a telephone consultation with a COBRA expert with decades of experience. If you need some coaching, call (866-439-0964).