CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA)

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires continuation of group health coverage for certain employees and their dependents who would otherwise lose coverage under the plan.

COBRA applies to any employer who employs 20 or more employees on at least 50 percent of the business days in the preceding calendar year. Employees include full-time, part-time and seasonal employees, owners, officers, self-employed individuals, and partners in a partnership.

QUALIFIED BENEFICIARY QUALIFYING EVENT DURATION OF CONTINUATION
COVERAGE*
Covered Employee • Termination of Employment (except for gross misconduct)
18 months
• Reduction in Hours of Employment 18 months 18 months
 
Covered Spouse of Employee • Termination of Employee-Spouse’s Employment (except for gross misconduct) 18 months
• Reduction in Employee-Spouse’s Hours of Employment 18 months
• Death of Employee-Spouse 36 months
• Divorce or legal separation from Employee-Spouse 36 months
• Employee-Spouse becomes entitled to Medicare 36 months
 
Covered Dependent of Employee • Termination of Employee-Parent’s Employment (except for gross misconduct) 18 months
• Reduction in Employee-Parent’s hours of employment 18 months
• Death of Employee-Parent 36 months
• Parent’s Divorce or Legal Separation 36 months
• Employee-parent becomes entitled to Medicare 36 months
• Cease Dependent Child Status under Plan 36 months
 
* The continuation period may be extended up to 29 months if the qualified beneficiary is determined to be disabled by the Social Security Administration at any time prior to the 60th day following the qualifying event. In addition, the continuation period may be extended up to 36 months if a second qualifying event occurs during the initial continuation period.

What Should An Employer Do?

COBRA NOTICE REQUIREMENTS
TYPE OF NOTICE PROVIDED BY TO WHOM TIMEFRAME
Initial General Notice of COBRA Rights Plan Covered Employee and Covered Spouse Within 90 days of coverage under the plan
Qualifying Event Notice:
  • Termination or Reduction in hours of Employee
  • Death of Employee
  • Employee’s Medicare Entitlement
Employer Plan Administrator 30 Days of Event
Election Form Notice Plan Administrator Qualified Beneficiaries 14 days of receiving Employer Notification of Qualifying Event
Notice of Ineligibility Plan Administrator Qualified Beneficiaries 14 days of request
Notice of Early COBRA Termination Plan Administrator Qualified Beneficiaries As soon as possible
Notice of Divorce or Legal Separation Employee
Qualified Beneficiary
Plan Administrator Within 60 days from the latest of:
  1. The date of the qualifying event;
  2. The date of loss of coverage; or
  3. Receipt of explanation of QB notice obligations.
Notice of Loss of Dependent Child Status Employee
Qualified Beneficiary
Plan Administrator Within 60 days from the latest of:
  1. The date of the qualifying event;
  2. The date of loss of coverage; or
  3. Receipt of explanation of QB notice obligations.
Notice of Second Qualifying Event Employee
Qualified Beneficiary
Plan Administrator Within 60 days from the latest of:
  1. The date of the qualifying event;
  2. The date of loss of coverage; or
  3. Receipt of explanation of QB notice obligations.
Social Security Disability Determination Employee
Qualified Beneficiary
Plan Administrator 1) Latest of:
  • 60 days following receipt of the disability determination;
  • 60 days following the qualifying event;
  • 60 days following the loss of coverage; or
  • 60 days following the receipt of QB notice obligation to provide disability determination; AND

2) Prior to the end of 18-month continuation period
Revocation of Social Security Disability Determination Employee
Qualified Beneficiary
Plan Administrator Within 30 days of receiving disability revocation letter
Conversion Notice Plan Administrator COBRA Continuees Within 180 days prior to expiration of COBRA

For more information: http://www.dol.gov/dol/topic/health-plans/cobra.htm