COBRA
COBRA is the federal law that lets eligible employees and their covered dependents continue group health coverage for a limited period after a qualifying event.
- LAW
- 29 U.S.C. §§1161-1168 (ERISA)
- LIMIT
- 18 months, or 36 for certain events
- DEADLINE
- You notify the plan within 30 days
- WATCH FOR
- Missing the 30-day notice to your plan
COBRA generally covers your group health plan if you normally employed 20 or more employees in the prior calendar year. A qualifying event, such as job loss or reduced hours, starts a chain of notices and an election window. Coverage stays the same group plan the employee had while active; only who pays changes. The qualified beneficiary generally pays the full premium, and the plan can charge up to 102% of it.
Which employers must offer COBRA?
COBRA generally applies to private-sector group health plans of employers with at least 20 employees. The count uses the prior calendar year: 20 or more on more than half of your typical business days. Full-time employees count as one employee. Part-time employees count as a fraction, based on hours worked. Plans sponsored by the federal government, churches, and certain church-related organizations fall outside the law.
Which events trigger COBRA, and for how long?
A qualifying event is one of the events the law lists that would make a covered person lose coverage. Termination for gross misconduct is not one. Coverage can end before the maximum, for example when premiums go unpaid or you stop offering any group health plan.
| QUALIFYING EVENT | MAXIMUM COVERAGE |
|---|---|
| Termination (not for gross misconduct) or reduced hours | 18 months |
| The same events, with a disability extension | 29 months |
| Divorce or legal separation | 36 months |
| Death of the covered employee | 36 months |
| The covered employee becomes entitled to Medicare | 36 months |
| A child loses dependent status under the plan | 36 months |
What happens after a qualifying event?
COBRA deadlines pass each step to someone else, so a clear, documented handoff between HR, payroll, and the plan administrator matters. Rules and extensions vary by qualifying event and plan type. Route the details through your plan or continuation administrator.
- 01
Report the event. You notify the plan within 30 days of job loss, reduced hours, death, Medicare entitlement, or employer bankruptcy. The employee or a qualified beneficiary reports a divorce, legal separation, or a child’s loss of dependent status, generally within 60 days.
- 02
Send the election notice. The plan administrator notifies each qualified beneficiary within 14 days of receiving the report.
- 03
Hold the election open. Each qualified beneficiary gets at least 60 days, counted from the later of losing coverage or the notice.
- 04
Collect premiums. The first payment can be required no earlier than 45 days after the election; later payments get at least 30 days’ grace.
Frequently asked
- 29 U.S. Code § 1161 - Plans must provide continuation coverage to certain individuals
- 29 U.S. Code § 1162 - Continuation coverage
- 29 U.S. Code § 1166 - Notice requirements
- An Employer’s Guide to Group Health Continuation Coverage Under COBRA
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.