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What Is a Cobra Termination?

The 1986 Consolidated Omnibus Budget Reconciliation Act (Cobra) provides an 18- to 36-month extension of employer group health plan benefits that would otherwise terminate due to job loss. Cobra terminates for a variety of reasons, including payment irregularities, maxing out of the plan and joining another health plan.

  1. Eligibility

    • Initial eligibility is determined by a "qualifying event," which allows a former employee to continue previous group health coverage through Cobra. Employees must have had a reduction in work hours or a termination of employment for "reasons other than gross misconduct." Cobra also extends to dependent children and spouses, for whom additional qualifying events include divorce, separation or death of the covered employee.

    Maximum Continuation Period Ends

    • The length of time that Cobra coverage is available depends on the type of qualifying event. If a qualifying event relates to the employee's job, Cobra will terminate after a maximum of 18 months unless proof of disability or a second qualifying event is furnished. A second qualifying event must cause the beneficiary to lose coverage in the absence of the first qualifying event. For such cases, Cobra coverage will terminate after 36 months.

    Failure to Fulfill Payment Obligations

    • COBRA coverage can terminate early for failure to make full and/or timely premium payments, which are usually monthly and have 30-day grace periods. If an initial payment isn't received within 45 days of electing Cobra, the plan can be terminated. Coverage can also be terminated if subsequent payments are not received or paid in full within the plan's established due dates.

    Participating in Other Health Plans

    • If a covered employee or dependent becomes entitled to Medicare, that person will be terminated from the Cobra plan. Likewise, beneficiaries who become participants in other group health plans that do not impose pre-exising exclusions or limitations are also no longer eligible for Cobra coverage and will be terminated from the plan.

    Other Reasons for Early Termination

    • Early termination can also be imposed if the employer ceases to maintain a group health plan, a beneficiary engages in plan-related fraud or a beneficiary fails to notify the plan of an initial or secondary qualifying event, for which he has 60 days.

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