COBRA Provisions



COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates.

COBRA establishes three specific criteria to qualify for continuation of health coverage:

Employers Subject to COBRA

COBRA applies to group health plans subject to ERISA or the Public Health Services Act (PHSA) if the employer sponsoring the plan has 20 or more employees on more than 50 percent of its typical business days in the previous calendar year.  All commonly-owned businesses (as determined under the control group and affiliated service group rules of Internal Revenue Code Section 414) must be included in determining the number of employees for purposes of COBRA.

An employer may determine the number of its employees on a daily basis or a pay period basis which must be consistent throughout the year.  If an employer has part-time employees, it must determine the full-time equivalent employees for those employees. If an employer determines the number of its employees on a daily basis each part-time employee counts as a fraction, with the numerator of the fraction equal to the number of hours worked by that employee and the denominator equal to the number of hours that must be worked on a typical business day in order to be considered a full-time employee.

If an employer determines the number of its employees on a pay period basis, each part-time employee counts as a fraction, with the numerator of the fraction equal to the number of hours worked by that employee during that pay period and the denominator equal to the number of hours that must be worked during that pay period in order to be considered a full-time employee. The determination of the number of hours required to be considered a full-time employee is based upon the employer’s employment practices, except that in no event may the hours required to be considered a full-time employee exceed eight hours for any day or 40 hours for any week.

Plans Subject to COBRA

Under COBRA, a group health plan 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 on a pay-as-you-go basis, or otherwise.

“Medical care” for this purpose includes:

Life insurance is not considered “medical care,” nor are disability benefits; and COBRA does not cover plans that provide only life insurance or disability benefits.

Public Sector COBRA: The Centers for Medicare & Medicaid Services (CMS), U.S. Department of Health and Human Services, has advisory jurisdiction with respect to COBRA as it applies to state and local government employers and their group health plans.  The public sector COBRA law provides for a private cause of action if an individual is denied a COBRA right under such a group health plan.

Qualifying Events

Qualifying events are certain events that would cause an individual to lose health coverage.

Qualifying Events for Employees

Qualifying Events for Spouses

Qualifying Events for Dependent Children

Qualified Beneficiaries

A qualified beneficiary is an individual covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage.

A qualified beneficiary must be:

In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is automatically considered a qualified beneficiary if the employee enrolls the child in the plan.

In certain cases involving the bankruptcy of the employer sponsoring the plan, a retired employee, the retired employee’s spouse (or former spouse), and the retired employee’s dependent children may be qualified beneficiaries.

Agents, independent contractors, and directors who participate in the group health plan may also be qualified beneficiaries.

Under COBRA, continued coverage must be made available to qualified beneficiaries for a limited period of time of 18, 29, or 36 months.  The length of time is determined by the qualifying event.

Qualifying Event and Duration of Coverage

Although COBRA specifies certain periods of time that continued health coverage must be offered to qualified beneficiaries, COBRA does not prohibit plans from offering continuation health coverage that goes beyond the COBRA periods.  You must review your SPD for the continuation time period.

Coverage begins on the date that coverage would otherwise have been lost by reason of a qualifying event and will end at the end of the maximum period.  It may end earlier if:

The Disability Extension allows someone who has elected COBRA to extend their continuation coverage for an additional 11 months after the initial 18 month period is over if:
1) They apply for Social Security Disability (SSDI) and are awarded benefits during the first 18 months of COBRA; and
2) Social Security determines that the date of onset of the disability was within 60 days of losing coverage; and
3) The Plan Administrator is informed by the participant within 60 days of receipt of the Notice of Award letter from Social Security.

Please note the additional cost of coverage that a plan may charge during a disability extension in the COBRA Cost section.

COBRA Premiums

Qualified Beneficiaries may be required to pay for COBRA coverage.

Premium Payments

The plan must allow COBRA participants to pay premiums on a monthly basis and may allow payments at other intervals (weekly or quarterly).

The plan is not obligated to send monthly premium notices.

Employer Responsibilities

Most employers outsource COBRA administration to their Third Party Administrator (“TPA”) or other COBRA administrator; or it is handled by their insurer. Please note that use of the term “Plan Administrator” is a reference to the named Plan Administrator for purposes of ERISA, which is the employer in most cases, and not the TPA or COBRA administrator. Rarely will the TPA or COBRA administrator assume the ERISA Plan Administrator role due to the fiduciary obligations associated with it. To review the notices that must be provided to plan participants and COBRA qualified beneficiaries, see COBRA Notices.

For this reason, even if COBRA Administration is outsourced, the Plan Administrator retains the ultimate responsibility for ensuring compliance with this law.

Employers also retain the following ADMINISTRATION and EDUCATION responsibilities:

Notifying the Plan Administrator within 30 days of a qualifying event, such as an employment termination/reduction in hours, death of the employee, or the employer’s bankruptcy. The Plan Administrator then has 14 days to send out the COBRA election notice. Again, since the employer is typically the Plan Administrator, as a practical matter this becomes a 44 day timeframe to send out a COBRA election notice after the occurrence of a qualifying event, whether the Plan Administrator sends out the election notice or uses an outside TPA, COBRA administrator or insurer to send out the COBRA election notice.

Educating employees as to their responsibility to notify the Plan Administrator (or the designee of the Plan Administrator, if one has been named in the initial COBRA notice and SPD) within 60 days of a qualifying event, in situations where the Plan Administrator would not have notice of such an event. These events include:

Obtaining up-to-date mailing addresses from departing employees and forwarding them to the insurer, TPA, or COBRA Administrator.

For an employee who has elected COBRA under an employer’s health FSA, coordinating health FSA deposits and withdrawals (if the account is not overspent) from a qualified account until the end of the plan year, at which time the employer’s limited COBRA obligation ends.

For an employee who has elected COBRA under an employer’s health reimbursement arrangement, contributing required amounts to a qualified HRA during COBRA continuation.

If you do not outsource COBRA administration:


Potential Risk and Penalties

Internal Revenue Service Code Penalties

ERISA Penalties

Additional Resources

An Employee’s Guide to Health Benefits under COBRA

American Rescue Plan Act of 2021 (ARPA) – EXPIRED

Provides for payment of COBRA premiums for Assistance Eligible Individuals (AEIs)Text-TooltipIndividuals who are eligible for COBRA due to involuntary termination of employment or reduction in hours for any reason and are eligible for COBRA during the premium payment period from April 1, 2021 through September 30, 2021.Text-TooltipOr for as long as the AEI remains eligible for COBRA during this period

Model Notices Under ARPA
There are multiple Model Notices:

These notices and additional information are also available on the DOL web site.