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What Employers Are Required to Follow Cobra?

COBRA, a law passed in 1986, requires employers to allow former full-time employees to temporarily continue receiving health care coverage under the company's group health plan at the group rate at their own expense. The law covers retirees as well as employees who have voluntarily or involuntarily left the company and those whose work hours have been reduced to the point that they don't qualify for group health plan coverage. Spouses and dependents who were enrolled also have the right to temporarily retain health benefits under the company's group health plan. In general, two classes of employers must comply with the law.

  1. Private Sector Employers

    • Private sector employers and employee organizations with 20 or more workers on more than half of its typical business days during the last calendar year must comply with COBRA. Within a month of the employee's departure or reduction in hours, an employer must make the group health plan administrator aware that the employee and his dependents are eligible to continue health benefits under COBRA. Even as the premium COBRA participants pay is higher than the portion that they would pay as full-time employees, it generally is lower than individual health coverage.

    Federal and State Agencies

    • Federal and state offices and agencies that sponsor group health plans for their employees also must comply with COBRA. U.S. federal agencies, however, aren't subject to the law. Federal government employees are covered under under the Federal Employees Health Benefits Amendments Act of 1988. The law also doesn't apply to group health plans sponsored by some church organizations, Washington, D.C government agencies, or any territory or possession of the United States.

    Length of COBRA Coverage

    • COBRA allows continuation of health care coverage for 18 months after the event that causes a beneficiary or his dependents to lose coverage. Qualifying events vary based upon the beneficiary's status as the employee, spouse or dependent child. If a second qualifying event occurs, COBRA allows the beneficiary to receive an additional 18 months of coverage. At its discretion, a health plan may provide a beneficiary longer periods of continuation coverage. If a person become disabled while receiving COBRA benefits, he may qualify for an additional 11 months of COBRA continuation coverage.

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