What is COBRA?

COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, is a federal law that offers an option for certain employees and their covered dependents to continue their group health coverage, at their own expense, in the event that it would otherwise be terminated. These qualifying events may include termination or reduction in hours, death of a covered employee, divorce or legal separation, Medicare entitlement, and loss of dependent status. Typically, COBRA can be utilized for up to 18 months, and in certain situations, up to 36 months.

It’s important to note that COBRA applies to most group health plans sponsored by employers with 20 or more employees on more than 50% of their typical business days in the previous calendar year. However, it does not apply to plans sponsored by the federal government, churches, or church-related organizations.

Employers are required to provide COBRA-qualifying individuals with a notice of their rights and responsibilities under the law. This notice must be provided within 14 days after the employee or other qualifying individual’s initial eligibility for coverage, or upon any qualifying event. 

Employers are also required to give a COBRA General Notice to all employees within 90 days of the start date of their health plan. This notice must include information about the employee’s rights and obligations under COBRA, including contact information for the appropriate person or entity to contact for more information. The employer must also provide an election.

In the context of COBRA, group health plans encompass various coverage options such as medical, dental, and vision plans, health flexible spending arrangements, health reimbursement arrangements, and similar programs related to health benefits. It’s worth mentioning that COBRA does not cover plans that solely provide life insurance or disability benefits, as they are not considered medical plans.

You can find more information on our HR Resource center, free to our clients.

This does not constitute legal advice and does not address State or local law.