Employers must stay informed about COBRA coverage rules to ensure compliance and protect both their businesses and employees. COBRA (Consolidated Omnibus Budget Reconciliation Act) provides employees and their families with continued health coverage after job loss. This outline is intended to serve as a refresher about COBRA compliance and which scenarios allow for continuation coverage.

COBRA Continuation Coverage

  • This applies to all private-sector/state and local government Group Health Plan (GHP) offered by employees that have at least 20 employees on more than 50% of their typical business days in the previous calendar year.
  • This does not apply to Federal Government employers and church plans.

Three steps are needed to determine eligibility for COBRA

  1. What is a Qualified Beneficiary?
    • Employee, former employee, spouse, or dependent child covered under the group health plan on the day before the qualifying event
    • Children born to or placed for adoption with the employee while the employee is on COBRA

  2. What is considered a Qualifying Event?
    • Covered Employee
      • Termination of a covered employee's employment (voluntary and involuntary)
      • Reduction in hours of a covered employee's employment
    • Spouse and dependent child (in addition to covered employee's events above)
      • Death of a covered Employee
      • Divorce or legal separation of a covered employee
      • Loss of "dependent child" status
      • A covered employee's entitlement to Medicare

  3. Loss of Coverage
    • Qualifying Events and loss of coverage don't have to be on the same day and can occur separately. Which events are covered, and for how long?
Qualifying Event Qualified Beneficiary (QB) Duration of Coverage
Employee's Termination other than for gross misconduct Employee, Spouse, Dependent Child 18 months
Employee's reduction in hours Employee, Spouse, Dependent Child 18 months
Divorce or legal separation Spouse, Dependent Child 36 months
Death of covered employee Spouse, Dependent Child 36 months
Covered employee enrollment in Medicare Spouse, Dependent Child 36 months
Loss of "dependent child" status Spouse, Dependent Child 36 months

COBRA Notices

  • COBRA General Notice: This notice must be provided to the employee and employee's spouse within the first 90 days of coverage and describe all COBRA rights and responsibilities.

  • COBRA Election Notice: must be provided within 14 days of notice of Qualifying Event.

Premium Cost:

  • Fully-Insured Plans: total premium charged by the Carrier plus 2%.

  • Self-Funded Plans: applicable premium plus 2%. Plans must establish an applicable premium to determine the COBRA rate.

If you'd like to learn more about the advantages of these products, please contact me at: 

Nick Carpenter 
Head Underwriter, Client Services 
ncarpenter@venbrook.com  
C: 860-836-6811 
70 Federal Street, Suite 300A 
Boston, MA 02110