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Cobra Requirements for a Previous Employer

The federal COBRA law provides for the continuation of employer-provided health insurance after you are terminated from your job. The law covers any employer with 20 or more employees; there were significant changes to the law made by the American Recovery and Reinvestment Tax act of 2009, also known as the stimulus bill.

  1. Covered Employers

    • The COBRA law applies to employers (with 20 or more employees) who provide group health insurance coverage to their employees. If the employer no longer maintains group health coverage, for example through bankruptcy or reorganization of the company, then the requirement to provide COBRA continuation coverage ends.

    Notifice to Administrator

    • The employer must notify the plan administrator within 30 days of the qualifying event, which can be a termination, death of the employee, or a reduction in working hours to a level that disqualifies the employee from group-health coverage.

    Notice to Employee

    • The employer must also provide notice to the beneficiary within 14 days of the notice being provided to the administrator. Because these notice deadlines can result in a delay between the termination and the payment of the initial premium by the beneficiary, there is often a premium surcharge to cover the insurance for that period of time.

    Election of Coverage

    • The insurance beneficiary has 60 days to respond to the employer's notice and elect continuation coverage, and 45 days after electing coverage to pay the first premium. A covered employee also has the right to continue coverage for family members, who were covered under the group health insurance provided by the employer. These family members may elect continuation coverage independently of the employee.

    Changes in the Law

    • By the 2009 stimulus bill, employers must pay a subsidy of 65 percent of the COBRA premium by paying the subsidized amount, then claiming the amount as a tax credit when filing with the Internal Revenue Service. This applies to all employees who involuntarily lose their jobs between September 1, 2008, and December 31, 2009. The subsidy is limited to nine months, and is gradually phased out for employees declaring at least $125,000 (for single taxpayers) or $250,000 (for married taxpayers filing jointly) and above. The eligibility period for the COBRA subsidy was extended by another law passed in 2010.

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