ANEMPLOYER’SGUIDETO
GROUPHEALTHCONTINUATION
COVERAGEUNDER
COBRA
EMPLOYEE BENEFITS SECURITY ADMINISTRATION
UNITED STATES DEPARTMENT OF LABOR
This publication has been developed by the U.S. Department of Labor,
Employee Benets Security Administration (EBSA).
To view this and other EBSA publications, visit the agency’s website.
To order publications or speak with a benets advisor, contact EBSA electronically.
Or call toll free: 1-866-444-3272
This material will be made available in alternate format
to persons with disabilities upon request:
Voice phone: (202) 693-8664
TTY: (202) 501-3911
This booklet constitutes a small en ti ty compliance guide for pur pos es of the Small Business
Regulatory Enforcement Fairness Act of 1996.
Contents
Introduction .................................................................................... 1
What is COBRA Continuation Coverage? ................................... 1
Who Is Entitled to Continuation Coverage? .............................. 3
COBRA Notice and Election Procedures ................................... 4
Benefits Under Continuation Coverage ..................................... 8
Duration of Continuation Coverage ............................................ 8
Chart: Summary of Qualifying Events,
QualifiedBeneficiaries,and
Maximum Periods of Continuation Coverage
..........................10
Paying for Continuation Coverage .............................................11
Coordination with Other Federal Benefit Laws .......................12
Role of the Federal Government ................................................14
Resources ......................................................................................14
Introduction
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
1
Health coverage is one of the most important benets that employers can provide,
with advantages for employees, their families, employers, and society as a whole.
Employers that sponsor group health plans enable their employees and their
families to take care of their essential medical needs, ensuring that they can
devote their energies to productive work.
Most employer-sponsored group health plans must comply with the Employee
Retirement Income Security Act (ERISA), which sets standards to protect
employee benets. One of the protections contained in ERISA is the right to
COBRA continuation coverage, a temporary continuation of group health coverage
that would otherwise be lost due to certain life events.
This guide summarizes COBRA continuation coverage and explains the rules that apply to group health plans. It
is intended to help employers that sponsor group health plans comply with this important federal law.
What Is COBRA Continuation Coverage?
COBRA – the Consolidated Omnibus Budget Reconciliation Act -- requires group health plans to
offer continuation coverage to covered employees, former employees, spouses, former spouses, and
dependent children when group health coverage would otherwise be lost due to certain events. Those
events include:
•
A covered employee’s death,
•
A covered employee’s job loss or reduction in hours for reasons other than gross misconduct,
•
A covered employee’s becoming entitled to Medicare,
•
A covered employee’s divorce or legal separation, and
•
A child’s loss of dependent status (and therefore coverage) under the plan.
COBRA sets rules for how and when plan sponsors must offer and provide continuation coverage,
how employees and their families may elect continuation coverage, and what circumstances justify
terminating continuation coverage.
Employers may require individuals to pay for COBRA continuation coverage. Premiums cannot exceed
the full cost of the coverage, plus a 2 percent administration charge.
Group Health Plans Subject to COBRA
COBRA generally applies to all private sector group health plans maintained by employers that had at
least 20 employees on more than 50 percent of its typical business days in the previous calendar year.
Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. Each
part-time employee counts as a fraction of a full-time employee, with the fraction equal to the number of
hours worked divided by the hours an employee must work to be considered full time. For example, if
full-time employees at Company A work 40 hours per week, a part-time employee who works 20 hours
per week counts as half of a full-time employee, and a part-time worker who works 16 hours per week
counts as four-tenths of a full-time employee.
COBRA also applies to plans sponsored by state and local governments.
1
The law does not apply, however, to
plans sponsored by the federal government or by churches and certain church-related organizations.
1  
The Department of Health and Human Services administers the COBRA provisions of the Public Health Service Act covering state and local government plans.
What is a group health plan? It is any arrangement that an employer establishes or maintains to
provide employees or their families with medical care, whether it is provided through insurance, by a
health maintenance organization, out of the employer’s assets, or through any other means. “Medical
care” includes for this purpose:
•
Inpatient and outpatient hospital care;
•
Physician care;
•
Surgery and other major medical benets;
•
Prescription drugs; and
•
Dental and vision care.
Life insurance and disability benets are not considered “medical care.” COBRA does not cover
plans that provide only life insurance or disability benets.
COBRA-covered group health plans that are sponsored by private-sector employers are generally
considered welfare plans under ERISA and therefore subject to ERISA’s other requirements. Under
ERISA, group health plans must be administered by a plan administrator, who is usually named in the
plan documents. Many group health plans are administered by the employer that sponsors the plan,
but group health plans are also frequently administered, in whole or in part, by a separate individual
or organization, such as a professional benets administration rm. Carrying out the requirements of
COBRA is the direct responsibility of the plan administrator.
Alternatives to COBRA Continuation Coverage
Those entitled to elect COBRA continuation coverage may have more affordable or generous
alternatives for coverage. One option may be “special enrollment” in other group health coverage.
Under the Health Insurance Portability and Accountability Act (HIPAA), upon certain events, group
health plans and health insurance issuers are required to provide a special enrollment period. During
that period, individuals who previously declined coverage for themselves and their dependents, and
who are otherwise eligible, may enroll without waiting until the next open season for enrollment. One
event that triggers special enrollment is an employee or dependent losing eligibility for other health
coverage. For example, an employee who loses group health coverage may be able to special enroll in
a spouse’s health plan. The employee or dependent must request special enrollment within 30 days of
losing other coverage.
Losing employment-based health coverage also gives the employee an opportunity to enroll in the
Health Insurance Marketplace in their state of residence. The Marketplace allows individuals and small
businesses to find and compare private health insurance options. Through the Marketplace, individuals
may qualify for cost-sharing reductions and a tax credit that lowers monthly premiums. Being offered
COBRA continuation coverage does not limit eligibility for coverage or for a tax credit through the
Marketplace. The employee or dependent must select Marketplace coverage within 60 days before or
after the loss of other coverage, or will have to wait until the next open enrollment period.
Through the Marketplace, individuals also can determine whether they or their dependents qualify for
free or low-cost coverage from Medicaid or the Children’s Health Insurance Program (CHIP). Eligible
individuals can apply for and enroll in Medicaid and CHIP at any time. For more information about the
Marketplace, including information about Medicaid or CHIP eligibility, visit HealthCare.gov.
UNITED STATES DEPARTMENT OF LABOR
2
If an employee or dependent chooses to elect COBRA, the employee or dependent can request special
enrollment in another group health plan or the Marketplace once COBRA is exhausted. In order to
exhaust COBRA coverage, the individual must receive the maximum period of COBRA coverage
available without early termination. An individual must request special enrollment:
•
Within 30 days of losing COBRA coverage, for coverage through another group health plan, or
•
Within 60 days before or after losing COBRA coverage, for coverage through a Marketplace plan.
If an employee or dependent chooses to terminate COBRA coverage early with no special enrollment
opportunity at that time, they will have to wait until the next open enrollment period to enroll in other
coverage through another group health plan or the Marketplace.
Medicare is the federal health insurance program for people who are 65 or older and certain younger
people with disabilities or End-Stage Renal Disease. Generally, if an employee loses employment-
based health coverage after their Medicare initial enrollment period and did not enroll in Medicare
Part A or B, they have an 8-month special enrollment period, beginning the earlier of:
•
The month after employment ends; or
•
The month after group health coverage ends.
If an employee or dependent elects COBRA coverage instead of Medicare, they may have to pay
a late enrollment penalty and may have a gap in coverage if they later decide they want Part B. If
they enroll in Medicare Part A or B before COBRA coverage ends, the plan may terminate their
continuation coverage. However, if Medicare Part A or B is effective on or before the date an
individual elects COBRA, the plan cannot discontinue COBRA coverage because of Medicare
entitlement even if they enroll in the other part of Medicare after electing COBRA coverage.
Generally, if an employee or dependent is enrolled in both COBRA and Medicare, Medicare will be
the primary payer and COBRA coverage will pay second. Certain plans may pay as if secondary to
Medicare, even if the individual is not enrolled in Medicare. For more information visit Medicare.gov.
Who Is Entitled to Continuation Coverage?
A group health plan must offer COBRA continuation coverage only to qualified beneficiaries and
only after a qualifying event has occurred.
Qualified Beneficiaries
A qualified beneficiary is an employee who was covered by a group health plan on the day before a
qualifying event occurred or that employee’s spouse, former spouse, or dependent child. The type of
qualifying event determines who the qualified beneficiaries are. In certain cases involving employer
bankruptcy, a retired employee and their spouse, former spouse, or dependent children may be
qualified beneficiaries. In addition, any child born to or placed for adoption with a covered employee
during a period of continuation coverage is automatically considered a qualified beneficiary. An
employer’s agents, independent contractors, and directors who participate in the group health plan
may also be qualified beneficiaries.
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
3
Qualifying Events
“Qualifying events” are events that cause an individual to lose group health coverage. The type of
qualifying event determines who the qualified beneficiaries are and the period of time that a plan must
offer continuation coverage. COBRA establishes only the minimum requirements for continuation
coverage. A plan may always choose to provide longer periods of continuation coverage and/or to
contribute toward the cost.
The following are qualifying events for a covered employee if they cause the covered employee to
lose coverage:
•
Termination of the covered employee’s employment for any reason other than “gross
misconduct,” or
•
Reduction in the covered employee’s hours of employment.
The following are qualifying events for a spouse and dependent child of a covered employee if they
cause the spouse or dependent child to lose coverage:
•
Termination of the covered employee’s employment for any reason other than “gross misconduct,”
•
Reduction in hours worked by the covered employee,
•
Covered employee becomes entitled to Medicare,
•
Divorce or legal separation from the covered employee, or
•
Death of the covered employee.
In addition to the above, the following is a qualifying event for a dependent child of a covered
employee if it causes the child to lose coverage:
•
Loss of “dependent child” status under the plan rules. Under the Affordable Care Act, plans
that offer coverage to children on their parents’ plan must make coverage available until the
adult child reaches the age of 26.
COBRA Notice and Election Procedures
Under COBRA, group health plans must provide covered employees and their families with specic notices
explaining their COBRA rights. Plans must also have rules for how COBRA continuation coverage is
offered, how qualied beneciaries may elect continuation coverage, and when it can be terminated.
Notice Procedures
Summary Plan Description
The COBRA rights provided under the plan, like other important plan information, must be described
in the plan’s Summary Plan Description (SPD). The SPD is a written document that gives important
information about the plan, including what benets are available under the plan, the rights of
participants and beneciaries under the plan, and how the plan works. ERISA requires group health
plans to give each participant an SPD within 90 days after becoming a plan participant (or within 120
days after the plan is rst subject to ERISA’s reporting and disclosure provisions). In addition, if there
UNITED STATES DEPARTMENT OF LABOR
4
are material changes to the plan, the plan must give participants a Summary of Material Modications
(SMM) not later than 210 days after the end of the plan year in which the changes become effective. If
the change is a material reduction in covered services or benets, the plan administrator must furnish
the Summary of Material Modications within 60 days after the reduction is adopted. If a covered
participant or beneciary requests in writing a copy of these or any other plan documents, the plan
administrator must provide them within 30 days.
COBRA General Notice
Group health plans must give each employee and spouse a general notice describing COBRA rights
within the rst 90 days of coverage. Group health plans can satisfy this requirement by including the
general notice in the plan’s SPD and giving it to the employee and spouse within this time limit.
The general notice must include:
•
The name of the plan and the name, address, and telephone number of someone the employee
and spouse can contact for more information on COBRA and the plan;
•
A general description of the continuation coverage provided under the plan;
•
An explanation of what qualied beneciaries must do to notify the plan of qualifying events
or disabilities;
•
An explanation of the importance of keeping the plan administrator informed of addresses of
the participants and beneciaries; and
•
A statement that the general notice does not fully describe COBRA or the plan and that more
complete information is available from the plan administrator and in the SPD.
The Department of Labor has developed a model general notice that single-employer group health
plans may use to satisfy the general notice requirement. In order to use this model general notice
properly, the plan administrator must complete it by lling in the blanks with the appropriate plan
information. The Department considers using the model general notice, appropriately completed, to be
good faith compliance with COBRA’s general notice content requirements.
COBRA Qualifying Event Notice
A group health plan must offer continuation coverage if a qualifying event occurs. The employer,
employee or beneciary must notify the group health plan of the qualifying event, and the plan is not
required to act until it receives an appropriate notice. Who must give notice depends on the type of
qualifying event.
The employer must notify the plan if the qualifying event is:
•
Termination or reduction in hours of employment of the covered employee,
•
Death of the covered employee,
•
Covered employee becoming entitled to Medicare, or
•
Employer bankruptcy.
The employer must notify the plan within 30 days after the event occurs.
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
5
The covered employee or one of the qualied beneciaries must notify the plan if the qualifying
event is:
•
Divorce,
•
Legal separation, or
•
A child’s loss of dependent status under the plan.
Group health plans must have procedures for how the covered employee or qualied beneciaries
can provide notice of these types of qualifying events. The plan can set a time limit for providing this
notice, but the time limit cannot be shorter than 60 days, starting from the latest of:
•
The date the qualifying event occurs,
•
The date the qualied beneciary loses (or would lose) coverage under the plan as a result of the
qualifying event, or
•
The date the qualied beneciary is informed, through the furnishing of either the SPD or the
COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.
The procedures must describe how, and to whom, notice should be given, and what information must
be included in the qualifying event notice. If one person gives notice of a qualifying event, the notice
covers all qualied beneciaries affected by that event.
If the group health plan does not have reasonable procedures for how to give notice of a qualifying
event, the employee can give written or oral notice by contacting the person or unit that handles the
employer’s employee benets matters. If the plan is a multiemployer plan, notice can also be given to
the joint board of trustees, and, if the plan is administered by an insurance company (or the benets
are provided through insurance), notice can be given to the insurance company.
COBRA Election Notice
After receiving a notice of a qualifying event, the plan must provide the qualied beneciaries with an
election notice within 14 days. The election notice describes their rights to continuation coverage and
how to make an election.
The election notice should include:
•
The name of the plan and the name, address, and telephone number of the plan’s COBRA
administrator;
•
Identication of the qualifying event;
•
Identication of the qualied beneciaries (by name or by status);
•
An explanation of the qualied beneciaries’ right to elect continuation coverage;
•
The date coverage will terminate (or has terminated) if continuation coverage is not elected;
•
How to elect continuation coverage;
•
What will happen if continuation coverage isn’t elected or is waived;
•
What continuation coverage is available, for how long, and (if it is for less than 36 months),
how it can be extended for disability or second qualifying events;
•
How continuation coverage might terminate early;
•
Premium payment requirements, including due dates and grace periods;
•
A statement of the importance of keeping the plan administrator informed of the addresses of
qualied beneciaries; and
•
A statement that the election notice does not fully describe COBRA or the plan and that more
information is available from the plan administrator and in the SPD.
UNITED STATES DEPARTMENT OF LABOR
6
The Department has a model election notice that plans may use to satisfy their obligation to provide
the election notice. In order to use this model election notice properly, the plan administrator must
complete it by lling in the blanks with the appropriate plan information. The Department will consider
use of the model election notice, appropriately completed, good faith compliance with the election notice
content requirements of COBRA.
COBRA Notice of Unavailability of Continuation Coverage
Group health plans may sometimes deny a request for continuation coverage or for an extension of
continuation coverage, when the plan determines the requester is not entitled to receive it. When a
group health plan denies a request for continuation coverage or a request for an extension, the plan
must give the denied individual a notice of unavailability of continuation coverage within 14 days after
the request is received, and explain the reason for denying the request.
COBRA Notice of Early Termination of Continuation Coverage
Continuation coverage must generally be available for a maximum period (18, 29, or 36 months). The
group health plan may terminate continuation coverage early, however, for any of a number of specic
reasons. (See “Duration of Continuation Coverage” on page 8.) When a group health plan decides
to terminate continuation coverage early for any of these reasons, the plan must give the qualied
beneciary a notice of early termination. The notice must be given as soon as practicable after the
decision is made, and it must describe the date coverage will terminate, the reason for termination, and
any rights the qualied beneciary may have under the plan or applicable law to elect alternative group
or individual coverage.
Special Rules for Multiemployer Plans
Multiemployer plans are allowed to adopt some special rules for COBRA notices. First, a
multiemployer plan may adopt its own uniform time limits for the qualifying event notice or the
election notice. A multiemployer plan also may choose not to require employers to provide qualifying
event notices, and instead to have the plan administrator determine when a qualifying event has
occurred. Any special multiemployer plan rules must be set out in the plan’s documents (and SPD).
Election Procedures
COBRA requires group health plans to give qualied beneciaries an election period to decide whether to
elect continuation coverage, and COBRA also gives qualied beneciaries specic election rights.
Plans must give each qualied beneciary at least 60 days to choose whether or not to elect COBRA
coverage, beginning from the date the election notice is provided, or the date the qualied beneciary
would otherwise lose coverage under the group health plan due to the qualifying event, whichever is later.
Each qualied beneciary has an independent right to elect continuation coverage. This means that
when several individuals (such as an employee, spouse, and their dependent children) become qualied
beneciaries due to the same qualifying event, each individual can make a different choice. The plan must
allow the covered employee or the covered employee’s spouse, however, to elect continuation coverage
on behalf of all of the other qualied beneciaries for the same qualifying event. A parent or legal guardian
of a qualied beneciary must also be allowed to elect on behalf of a minor child.
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
7
If qualied beneciaries waive continuation coverage during the election period, they must be
permitted to later revoke the waiver of coverage and elect continuation coverage, as long as they do so
before the election period ends. In such cases, the plan may make continuation coverage begin on the
date the waiver was revoked.
Benefits under Continuation Coverage
COBRA also sets standards for the continuation coverage that plans must provide.
The continuation coverage must be identical to the coverage currently available under the plan to
similarly situated individuals who are not receiving continuation coverage. (Generally, this is the
same coverage that the qualied beneciary had immediately before the qualifying event.) A qualied
beneciary receiving continuation coverage must receive the same benets, choices, and services that
a similarly situated participant or beneciary currently receives under the plan, such as the right during
an open enrollment season to choose among available coverage options. The qualied beneciary is
also subject to the same plan rules and limits that would apply to a similarly situated participant or
beneciary, such as co-payment requirements, deductibles, and coverage limits. The plan’s rules for
ling benet claims and appealing any claims denials also apply.
Any changes made to the plan’s terms that apply to similarly situated active employees and their
families will also apply to qualied beneciaries receiving COBRA continuation coverage. If a child
is born to or adopted by a covered employee during a period of continuation coverage, the child is
automatically considered to be a qualied beneciary receiving continuation coverage. The plan must
allow the child to be added to the continuation coverage.
Duration of Continuation Coverage
Maximum Periods
COBRA requires that continuation coverage extend from the date of the qualifying event for a limited
period of 18 or 36 months. The length of time for which continuation coverage must be made available
(the “maximum period” of continuation coverage) depends on the type of qualifying event. A plan,
however, may provide longer periods of coverage beyond the maximum period required by law.
When the qualifying event is the covered employee’s termination of employment (for reasons other
than gross misconduct) or reduction in work hours, qualied beneciaries must be eligible for 18
months of continuation coverage.
When the qualifying event is the end of employment or reduction of the employee’s hours, and the
employee became entitled to Medicare less than 18 months before the qualifying event, COBRA
coverage for the employee’s spouse and dependents must be available for up to 36 months after the
date the employee becomes entitled to Medicare. For example, if a covered employee becomes entitled
to Medicare 8 months before the date their employment ends (termination of employment is the
COBRA qualifying event), COBRA coverage for their spouse and children must be available for up to
28 months (36 months minus 8 months).
For all other qualifying events, qualied beneciaries must receive 36 months of continuation coverage.
2
2
  Under COBRA, certain retirees and their family members who receive post-retirement health coverage from employers have special COBRA rights in the event that the
employer is involved in bankruptcy proceedings begun on or after July 1, 1986. This booklet does not fully describe the COBRA rights of that group.
UNITED STATES DEPARTMENT OF LABOR
8
Early Termination
A group health plan may terminate continuation coverage earlier than the end of the maximum
period for any of the following reasons:
•
Premiums are not paid in full on a timely basis,
•
The employer ceases to maintain any group health plan,
•
A qualied beneciary begins coverage under another group health plan after electing
continuation coverage,
•
A qualied beneciary becomes entitled to Medicare benets after electing continuation
coverage, or
•
A qualied beneciary engages in fraud or other conduct that would justify terminating
coverage of a similarly situated participant or beneciary not receiving continuation
coverage.
If continuation coverage is terminated early, the plan must provide the qualied beneciary with an
early termination notice. (See “COBRA Notice and Election Procedures” on page 4.)
Extension of an 18-month Period of Continuation Coverage
There are two circumstances under which individuals entitled to an 18-month maximum period of
continuation coverage can become entitled to an extension of that maximum period. The rst is when
one of the qualied beneciaries is disabled; the second is when a second qualifying event occurs.
Disability
If one of the qualied beneciaries in a family is disabled and meets certain requirements, all of the
qualied beneciaries in that family are entitled to an 11-month extension of the maximum period of
continuation coverage (for a total maximum period of 29 months of continuation coverage). The plan
can charge qualied beneciaries an increased premium, up to 150 percent of the cost of coverage,
during the 11-month disability extension.
The requirements are, rst, that the Social Security Administration (SSA) determines that the
qualied beneciary is disabled before the 60th day of continuation coverage and, second, that the
disability continues during the rest of the initial 18-month period of continuation coverage.
The disabled qualied beneciary (or another person on his or her behalf) also must notify the plan
of the SSA determination. The plan can set a time limit for providing this notice of disability, but the
time limit cannot be shorter than 60 days, starting from the latest of:
•
The date SSA issues the disability determination,
•
The date the qualifying event occurs,
•
The date the qualied beneciary loses (or would lose) coverage under the plan as a result of
the qualifying event, or
•
The date the qualied beneciary is informed, through the furnishing of either the SPD or the
COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.
The right to the disability extension may be terminated if SSA
determines that the qualied
beneciary is no longer disabled. The plan can require disabled qualied beneciaries to provide
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
9
notice when such a determination is made. The plan must give the qualied beneciaries at least 30
days after the SSA determination to provide such notice.
The rules for how to give a disability notice and a notice of no longer being disabled should be
described in the plan’s SPD (and in the election notice for any offer of an 18-month period of
continuation coverage).
Second Qualifying Event
An 18-month extension may be available to qualied beneciaries receiving an 18-month maximum
period of continuation coverage (giving a total maximum period of 36 months of continuation
coverage) if the qualied beneciaries experience a second qualifying event, for example, death of
the covered employee, divorce or legal separation of the covered employee and spouse, Medicare
entitlement (in certain circumstances), or loss of dependent child status under the plan. The second
event can be a second qualifying event only if it would have caused the qualied beneciary to lose
coverage under the plan in the absence of the rst qualifying event.
The plan must have procedures for how a qualied beneciary should provide notice of a second
qualifying event. These rules should be described in the plan’s SPD (and in the election notice for any
offer of an 18-month period of continuation coverage). The plan can set a time limit for providing this
notice, but the time limit cannot be shorter than 60 days from the latest of:
•
The date on which the qualifying event occurs,
•
The date on which the qualied beneciary loses (or would lose) coverage under the plan as a
result of the qualifying event, or
•
The date on which the qualied beneciary is informed, through the furnishing of either the
SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures
for doing so.
Summary of Qualifying Events, Qualified Beneficiaries, and
Maximum Periods of Continuation Coverage
The following chart shows the maximum period for which continuation coverage must be offered for the
specic qualifying events and the qualied beneciaries who are entitled to elect continuation coverage
when the specic event occurs. Note that an event is a qualifying event only if it causes the qualied
beneciary to lose coverage under the plan.
UNITED STATES DEPARTMENT OF LABOR
10
QUALIFYING EVENT
QUALIFIED
BENEFICIARIES
MAXIMUM PERIOD OF
CONTINUATION
COVERAGE
Termination (for reasons other than gross
misconduct) or reduction in hours of employment
Employee
Spouse
Dependent Child
18 months
3
Employee enrollment in Medicare Spouse
Dependent Child
36 months
4
Divorce or legal separation Spouse
Dependent Child
36 months
Death of employee Spouse
Dependent Child
36 months
Loss of “dependent child” status under the plan Dependent Child 36 months
Paying for Continuation Coverage
Group health plans can require qualied beneciaries to pay for COBRA continuation coverage,
although plans can choose to provide continuation coverage at reduced or no cost. The maximum
amount charged to qualied beneciaries cannot exceed 102 percent of the cost to the plan for
similarly situated individuals covered under the plan who have not incurred a qualifying event.
In calculating premiums for continuation coverage, a plan can include the costs paid by both the
employee and the employer, plus an additional 2 percent for administrative costs. For qualied
beneciaries receiving the 11-month disability extension of continuation coverage, the premium for
those additional months may be increased to 150 percent of the plan’s total cost of coverage.
Plans may increase COBRA premiums for qualied beneciaries if the cost to the plan increases,
but generally plans must x premiums before each 12-month premium cycle. The plan must allow
qualied beneciaries to pay the required premiums on a monthly basis if they ask to do so, and may
allow payments at other intervals (for example, weekly or quarterly). The COBRA election notice
should describe all of the necessary information about COBRA premiums, when they are due, and
the consequences of payment and nonpayment.
Plans cannot require qualied beneciaries to pay a premium when they make the COBRA election.
Plans must provide at least 45 days after the election (that is, the date the qualied beneciary mails
the election form if using rst-class mail) for making an initial premium payment. If a qualied
beneciary fails to make any payment before the end of the initial 45-day period, the plan can
terminate the qualied beneciary’s COBRA rights. The plan should establish due dates for any
premiums for subsequent periods of coverage, but it must provide a minimum 30-day grace period
for each payment.
3
In certain circumstances, qualied beneciaries entitled to 18 months of continuation coverage may become entitled to a disability extension of an additional 11 months (for a
total maximum of 29 months) or an extension of an additional 18 months due to the occurrence of a second qualifying event (for a total maximum of 36 months). (See “Duration
of Continuation Coverage” on page 8.)
4
 The actual period of continuation coverage may vary depending on factors such as whether the Medicare entitlement occurred prior to or after the end of the covered
employee’s employment or reduction in hours. For more information, see “Duration of Continuation Coverage” on page 8 or contact the Department of Labor’s Employee
Benefits Security Administration or call toll-free at 1-866-444-3272.
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
11
Plans can terminate continuation coverage if full payment is not received before the end of a grace
period. If the amount of a payment made to the plan is incorrect, but is not signicantly less than the
amount due, the plan must notify the qualied beneciary of the deciency and grant a reasonable
period (for this purpose, 30 days is considered reasonable) to pay the difference. The plan is not
obligated to send monthly premium notices, but must provide a notice of early termination if it
terminates continuation coverage early due to failure to make a timely payment.
Health Coverage Tax Credit
Certain individuals may be eligible for a Federal income tax credit that can help with qualied monthly
premium payments. The Health Coverage Tax Credit, while available, is a refundable tax credit to pay
for specied types of health insurance coverage (including COBRA continuation coverage).
Those potentially eligible for the Health Coverage Tax Credit include workers who lose their jobs due
to the negative effects of global trade and who are eligible to receive certain benets under the Trade
Adjustment Assistance (TAA) Program, as well as certain individuals who are receiving pension
payments from the Pension Benet Guaranty Corporation (PBGC). The Health Coverage Tax Credit
pays 72.5 percent of qualied health insurance premiums, with individuals paying 27.5 percent. For
more information on TAA, visit the
Employment and Training Administration’s website.
Individuals who are eligible for the Health Coverage Tax Credit may claim the tax credit on their
income tax returns at the end of the year. Qualied family members of eligible TAA recipients or
PBGC payees who enroll in Medicare, die, or nalize a divorce, are eligible to receive the Health
Coverage Tax Credit for up to 24 months from the month of the event.
If an individual was receiving the Health Coverage Tax Credit in 2020, they may have been removed
from the program pending its expiration at the end of the year and advised to seek alternative
insurance options. With the Health Coverage Tax Credit’s extension through 2021, the individual may
be able to work with their health coverage provider to be placed back on coverage that would qualify
for the credit. Then they can either re-enroll in the program or claim the credit on their federal income
tax form next year. At the time of this printing, the Health Coverage Tax Credit is set to expire on
December 31, 2021.
For questions about the Health Coverage Tax Credit and how to re-enroll, visit the IRS’s website.
Coordination with Other Federal Benefit Laws
The Family and Medical Leave Act (FMLA) requires employers to maintain coverage under any
“group health plan” for employees on Family and Medical Leave Act leave under the same conditions
coverage would have been provided if the employee had continued working. Group health coverage
that is provided under the Family and Medical Leave Act during a family or medical leave is not
COBRA continuation coverage, and taking leave under the Act is not a qualifying event under COBRA.
A COBRA qualifying event may occur, however, when an employer’s obligation to maintain health
benets under the Family and Medical Leave Act ceases, such as when an employee taking Family and
Medical Leave Act leave decides not to return to work and noties an employer of his or her intent.
UNITED STATES DEPARTMENT OF LABOR
12
The Affordable Care Act provides additional protections for coverage under an employment-based
group health plan, including COBRA continuation coverage. These protections include:
•
Extending dependent child coverage to age 26,
•
Prohibiting limits or exclusions from coverage for preexisting conditions,
•
Banning lifetime or annual dollar limits on coverage for essential health benets, and
•
Requiring group health plans and insurers to provide an easy-to-understand summary of a
health plan’s benets and coverage.
Some plan sponsors may have chosen to make only routine changes and generally keep the coverage
under their health plan the same as it was on March 23, 2010. These grandfathered health plans are
required to comply with some of the Affordable Care Act protections (including those noted above), but
not all. Additional protections that may apply to non-grandfathered health plans include coverage for:
•
Certain preventive services (such as blood pressure, diabetes and cholesterol tests, regular
well-baby and well-child visits, routine vaccinations and many cancer screenings) without
cost sharing; and
•
Emergency services in an emergency department of a hospital outside your plan’s network
without prior approval from your health plan.
For more information regarding whether your plan is a grandfathered health plan and the
requirements under the Affordable Care Act, visit
DOL’s Aordable Care Act web page.
Certain TAA
Program participants have a second opportunity to elect COBRA continuation coverage.
Individuals who are eligible and receive Trade Readjustment Allowances, individuals who would be
eligible to receive Trade Readjustment Allowances but have not yet exhausted their unemployment
insurance benets, and individuals receiving benets under Alternative Trade Adjustment Assistance
or Reemployment Trade Adjustment Assistance who did not elect COBRA during the general election
period, may get a second election period. This additional, second election period is measured 60 days
from the rst day of the month in which an individual is determined eligible for the TAA benets listed
above and receives such benet. For example, if an individual’s general election period runs out and he
or she is determined eligible for Trade Readjustment Allowances (or would be eligible for Allowances
but have not exhausted unemployment insurance benets) or begin to receive Alternative Trade
Adjustment Assistance or Reemployment Trade Adjustment Assistance benets 61 days after separating
from employment, at the beginning of the month, he or she would have approximately 60 more days
to elect COBRA. However, if this same individual does not meet the eligibility criteria until the end
of the month, the 60 days are still measured from the rst of the month, in effect giving the individual
about 30 days. Additionally, a COBRA election must be made no later than 6 months after the date
of the TAA-related loss of coverage. COBRA coverage chosen during the second election period
typically begins on the first day of that period. More information about the Trade Act is available at the
Employment and Training Administration’s website.
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA
13
Role of the Federal Government
COBRA continuation coverage laws are administered by several agencies. The Departments of
Labor and the Treasury have jurisdiction over private-sector group health plans. The Department of
Health and Human Services administers the continuation coverage law as it applies to state and local
government health plans.
The Labor Department’s interpretive responsibility for COBRA is limited to the disclosure and
notification requirements of COBRA. The Labor Department has issued regulations on the COBRA
notice provisions. The Treasury Department has interpretive responsibility to define the required
continuation coverage. The Internal Revenue Service, Department of the Treasury, has issued
regulations on COBRA provisions relating to eligibility, coverage, and payment. The Departments of
Labor and the Treasury share jurisdiction for enforcement of these provisions.
Resources
If you need further information about COBRA, the Affordable Care Act, HIPAA, or ERISA, visit the
Employee Benefits Security Administration’s (EBSA) website. Or contact EBSA electronically or
call toll free 1-866-444-3272.
For more information on COVID-19 protections, visit the Employee Benefits Security
Administration’s COVID-19 Response page.
The Centers for Medicare and Medicaid Services offer information about COBRA provisions for
public-sector employees. To find out more, visit their website or contact the agency via email or by
calling toll free at 1-877-267-2323, ext. 6-1565.
Federal employees are covered by a federal law similar to COBRA. Those employees should contact
the personnel office serving their agency for more information on temporary extensions of health
benefits.
For more information on the Affordable Care Act, visit HealthCare.gov.
Further information on the Family and Medical Leave Act is available at the Wage and Hour
Division’s website or by calling toll free 1-866-487-9243.
For more information on Medicare, visit their website or call 1-800-MEDICARE.
For information on the Trade Adjustment Assistance (TAA) Program, visit the Employment and
Training Administration’s website. For information about the Health Coverage Tax Credit, visit
the IRS’s website.
UNITED STATES DEPARTMENT OF LABOR
14
EMPLOYEE BENEFITS SECURITY ADMINISTRATION
UNITED STATES DEPARTMENT OF LABOR
October 2021