Does a layoff trigger COBRA?
Generally yes, if the employer is subject to COBRA and the layoff ends coverage. The details decide who is covered.
Who is covered, and who is not.
Employer Size
COBRA generally applies to group health plans of employers with 20 or more employees. Some states add continuation rules for smaller employers.
Who Qualifies
Covered employees, their spouses and their dependent children can be qualified beneficiaries.
Exceptions
Termination for gross misconduct is an exception, and so is anyone who was not covered when the event happened.
How it plays out.
The short answer has several conditions. The plan has to be a group health plan subject to COBRA. The employer generally needs 20 or more employees. The layoff has to end coverage, or reduce hours so that coverage ends.
If those are met, the people who lose coverage are entitled to elect continuation. That includes the employee, a spouse and dependent children who were covered. Each can elect separately.
A few cases are different: gross misconduct, people who were not enrolled and employers below the threshold. Some states add their own continuation rules for smaller employers, so check state law with counsel.
How we help.
A broker should take work off a smaller HR team, not add to it.
Confirm Applicability
We help confirm whether COBRA applies to your plan and group.
List the People
We help list who lost coverage and who may be a qualified beneficiary.
Questions to Counsel
Gross misconduct and other legal calls go to your attorney.
How to check.
Confirm the Plan Type
Check that the plan is a group health plan covered by COBRA.
Check Employer Size
Confirm whether the employer meets the 20-employee threshold.
Identify the Event
Confirm the layoff or hours reduction ends coverage.
List Who Lost Coverage
Make a list of employees, spouses and dependents.
Mistakes that cost money.
Assuming Small Means Exempt
State rules can reach smaller employers.
Skipping Part-Time Staff
Part-time employees who were covered may also qualify.
Treating Resignations Differently
Termination for any reason other than gross misconduct is generally a qualifying event.
Related guides.
Right-Sizing HR After Layoffs: The Benefits Workload
The full picture.
COBRA Notices After a Layoff
A layoff that ends coverage can trigger COBRA notices on set deadlines.
Layoff Benefits Notices Checklist
A layoff can trigger COBRA, WARN, state unemployment and plan-level notices.
Is HR carrying more than it should?
Tell us what changed, and we will show you what to take off the desk.
Your renewal letter
Your census
Your current plan documents
Your renewal date
Rough answers are fine. We build the numbers from there.
Laws and rules referenced
COBRA: ERISA §§ 601-608, 29 U.S.C. §§ 1161-1168
U.S. Department of Labor: COBRA — Continuation coverage overview.
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