Cobra Fact Sheet

COBRA Continuation Coverage Fact Sheet Poster

Help employees understand their rights and responsibilities under federal continuation coverage rules with the COBRA Continuation Coverage Fact Sheet Poster. This employee benefits resource provides an overview of the Consolidated Omnibus Budget Reconciliation Act (COBRA), including eligibility, qualifying events, coverage periods, election rights, premiums, and important notice requirements.

COBRA can allow eligible employees, spouses, and dependent children to temporarily continue employer-sponsored group health coverage when certain events would otherwise cause them to lose coverage.

What Is COBRA?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. Federal COBRA continuation coverage requirements give certain employees and family members the right to temporarily continue group health coverage after specific qualifying events that would otherwise result in a loss of coverage.

COBRA continuation coverage generally provides qualified beneficiaries with the same group health coverage available to similarly situated employees or family members who have not experienced a qualifying event.

Which Employers Are Generally Subject to COBRA?

Federal COBRA generally applies to private-sector group health plans maintained by employers that had at least 20 employees on more than 50 percent of their typical business days during the previous calendar year.

COBRA also generally applies to group health plans sponsored by state and local governments. Different rules apply to certain federal government plans, churches, and church-related organizations.

Employers with fewer than 20 employees may be subject to state continuation coverage laws, sometimes referred to as mini-COBRA requirements.

What Is a COBRA Qualifying Event?

A qualifying event is an event that causes a qualified beneficiary to lose coverage under a group health plan. Depending on the individual and circumstances, COBRA qualifying events can include:

• Termination of employment for reasons other than gross misconduct
• Reduction in an employee's work hours
• Death of the covered employee
• Divorce or legal separation from the covered employee
• Certain circumstances involving the covered employee becoming entitled to Medicare
• A dependent child losing dependent status under the terms of the health plan

Who Is a COBRA Qualified Beneficiary?

A qualified beneficiary is generally an individual who was covered by the group health plan on the day before a qualifying event and who loses coverage because of that event.

Depending on the qualifying event, qualified beneficiaries can include:

• The covered employee
• The employee's spouse
• Dependent children

Each qualified beneficiary generally has an independent right to elect COBRA continuation coverage.

How Long Does COBRA Coverage Last?

The maximum COBRA continuation period depends on the qualifying event and the qualified beneficiary.

When coverage is lost because of termination of employment for reasons other than gross misconduct or a reduction in work hours, COBRA coverage is generally available for up to 18 months.

Other qualifying events can provide spouses and dependent children with up to 36 months of continuation coverage. These can include death of the covered employee, divorce or legal separation, or loss of dependent-child status under the plan.

Can COBRA Coverage Be Extended Beyond 18 Months?

In certain circumstances, qualified beneficiaries entitled to an initial 18-month COBRA period may qualify for additional continuation coverage.

A qualifying disability determination can potentially extend coverage for an additional 11 months, for a total maximum period of 29 months. Certain second qualifying events can potentially extend coverage for eligible family members to a maximum of 36 months.

Specific notice requirements and deadlines apply to COBRA extensions, so qualified beneficiaries should carefully review their plan documents and COBRA notices.

How Long Do You Have to Elect COBRA?

Qualified beneficiaries generally have at least 60 days to decide whether to elect COBRA continuation coverage.

The election period generally runs from the later of the date coverage would otherwise end because of the qualifying event or the date the COBRA election notice is provided.

Each qualified beneficiary may make an independent election. For example, a spouse or dependent child may elect COBRA even if the former employee does not.

What COBRA Notices Must Be Provided?

COBRA includes several notice requirements for group health plans, employers, and qualified beneficiaries.

Important COBRA notices can include:

• General Notice – provides covered employees and spouses with general information about COBRA rights
• Qualifying Event Notice – communicates certain qualifying events to the plan when required
• Election Notice – explains a qualified beneficiary's right to elect COBRA continuation coverage following a qualifying event
• Notice of Unavailability – informs an individual when the plan determines that COBRA continuation coverage is not available
• Early Termination Notice – provides notice when COBRA coverage will end before the maximum coverage period

How Much Does COBRA Coverage Cost?

COBRA continuation coverage can cost significantly more than active employee coverage because the qualified beneficiary may be responsible for both the employee and employer portions of the health plan premium.

Under federal COBRA rules, qualified beneficiaries can generally be required to pay up to 102 percent of the total cost of coverage. The additional 2 percent can cover administrative costs.

During certain disability extensions, the plan may be permitted to charge up to 150 percent of the applicable cost when the requirements for the extension are met.

When Is the First COBRA Premium Due?

After electing COBRA, qualified beneficiaries generally must be given at least 45 days to make the initial premium payment.

Because COBRA can provide coverage retroactive to the date prior coverage ended when properly elected and paid, the first payment may cover more than one month of premiums.

Does COBRA Provide the Same Health Benefits?

COBRA continuation coverage generally must be identical to the coverage currently available to similarly situated employees and family members who have not experienced a qualifying event.

Qualified beneficiaries generally receive the same benefits, choices, and services available under the plan, including applicable opportunities during open enrollment. They are also generally subject to the same deductibles, copayments, coverage limits, claims procedures, and other plan rules.

Can Spouses and Dependents Elect COBRA Separately?

Yes. Qualified beneficiaries generally have independent COBRA election rights. A spouse or dependent child can elect continuation coverage even when the employee chooses not to elect COBRA.

Different qualifying events can also result in different maximum continuation periods for spouses and dependent children.

When Can COBRA Coverage End Early?

COBRA continuation coverage may end before the maximum coverage period in certain circumstances. Examples can include:

• Required premiums are not paid in full and on time
• The employer stops maintaining any group health plan
• A qualified beneficiary becomes covered under another group health plan in circumstances permitted by COBRA rules
• Other conditions for early termination permitted under federal COBRA requirements occur

Qualified beneficiaries should review their COBRA election notice and Summary Plan Description for the rules that apply to their coverage.

COBRA vs. Other Health Coverage Options

COBRA is not necessarily the only health coverage option available after a qualifying event. Depending on the individual's circumstances, alternatives may include:

• Special enrollment in a spouse's employer-sponsored health plan
• Coverage through another employer-sponsored plan
• Health Insurance Marketplace coverage
• Medicaid or the Children's Health Insurance Program when eligible
• Other coverage available under applicable federal or state programs

Individuals should compare premiums, deductibles, provider networks, prescription coverage, enrollment deadlines, and other plan features before selecting health coverage.

Is a COBRA Fact Sheet Poster Federally Required?

Federal COBRA law requires covered plans, employers, and plan administrators to provide specific notices and information to qualified beneficiaries. However, this particular COBRA Continuation Coverage Fact Sheet Poster is intended as a supplemental employee benefits and awareness resource and should not be represented as a universally required federal workplace poster.

This poster does not replace required COBRA General Notices, Election Notices, Summary Plan Descriptions, individual benefits communications, plan documents, or other notices required under federal or state continuation coverage laws.

Keep COBRA Information Current

COBRA requirements and employee health benefit plans can change. Employers and qualified beneficiaries should rely on current plan documents and official guidance when determining eligibility, election deadlines, premium amounts, coverage periods, and continuation coverage rights.

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