COBRA lets people keep group coverage after a qualifying event.
COBRA requires many group health plans to offer temporary continuation coverage when coverage would otherwise end because of events such as a job loss or a reduction in hours.
The Basics for Employers.
A plain-English summary. This is general information, not legal advice, and the rules change, so check the current text.
Who It Covers
It generally applies to group health plans of employers that had at least 20 employees on a typical business day in the prior year.
Notices and Elections
Employers notify the plan administrator of a qualifying event, the administrator sends the election notice, and the person then has a window to elect coverage.
Premiums and Length
The person can be charged up to 102 percent of the plan cost, and coverage lasts 18 or 36 months depending on the event.
How it plays out.
COBRA is a federal continuation rule. It does not make coverage cheaper or create new coverage. It lets people who would lose group coverage because of a qualifying event keep the same coverage, usually at their own cost, for a limited time.
Qualifying events include termination of employment, reduced hours, divorce, death of the covered employee, a child aging out and certain other events. Each event sets who can elect and how long continuation can last.
For employers, the practical load is notices and administration: initial notices when coverage starts, event notices, election notices and payment handling. Many employers use a COBRA administrator for this, which moves the work but not the responsibility.
Where This Shows Up in Your Plan.
COBRA Administration
What the administration work involves from notice to termination.
ERISA, ACA Reporting and Form 5500 Support
The reporting and filing side of the same compliance picture.
Setting up COBRA.
Confirm Coverage
Check which plans are subject to COBRA.
Choose Administration
Decide whether to handle COBRA in-house or through an administrator.
Send Initial Notices
Make sure new participants receive the general notice.
Track Events
Set up a way to capture each qualifying event as it happens.
Mistakes to avoid.
Missing the Initial Notice
The general notice goes out when coverage begins.
Events Nobody Reports
Families usually report divorce and a child aging out, so explain how.
Assuming the Administrator Covers Everything
The employer still owes accurate information to the administrator.
Other Rules Employers Work With.
ERISA
29 U.S.C. Chapter 18
Family and Medical Leave Act
29 U.S.C. Chapter 28
USERRA
38 U.S.C. Chapter 43
Laws and Rules Referenced
COBRA Continuation Coverage (29 U.S.C. 1161) — The statute text, published by Cornell Law School’s Legal Information Institute.
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