A health plan helps you and your family take care of your essential medical needs. It is one of the most important benefits an employer can provide.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), many employees and their families who would lose their health insurance or other group health plan coverage because of a serious life event can keep it for a limited time, usually at their own expense. This temporary extension of health coverage is called COBRA continuation coverage.
This publication will:
COBRA generally applies to all group health plans maintained by private-sector employers with at least 20 employees or by state and local governments.
Under COBRA, a group health plan is any arrangement an employer makes to provide employees or their families with medical care. It doesn't matter whether the benefit is provided through insurance, by a health maintenance organization, out of the employer's assets, or through any other means.
"Medical care" includes:
COBRA requires most of these plans to provide a temporary continuation of health coverage that would otherwise end due to certain events.
Those events include:
Under COBRA, the continuation coverage must be offered to covered employees, former employees, spouses, former spouses, and dependent children.
If you elect continuation coverage, employers may require you to pay the full cost of the coverage, plus a 2 percent administration charge. The continuation coverage premium is often more expensive than you're used to paying, because employers usually pay part of the cost of coverage for active employees. COBRA continuation coverage lasts only for a limited time.
COBRA does not apply to plans sponsored by the federal government or by churches and certain church-related organizations. Many states have laws similar to COBRA or laws sometimes referred to as mini-COBRA, which apply to health plans maintained by employers with fewer than 20 employees. Check with your state insurance commissioner's office to see if such coverage is available to you.
COBRA also does not cover plans that provide only life insurance or disability benefits, as those benefits are not considered "medical care."
If you are entitled to elect COBRA continuation coverage, you should consider all options before you make your decision. There may be more affordable or generous health coverage options for you and your family through other group health plan coverage (such as a spouse's plan), the Health Insurance Marketplace, Medicaid, or Medicare.
Under the Health Insurance Portability and Accountability Act (HIPAA), if you or your dependents lose eligibility for group health coverage, including continuation coverage, you may be able to special enroll in other group health coverage without waiting until the next open season.
For example, an employee who loses group health coverage may be able to enroll in a spouse's plan through a special enrollment period, or a dependent who loses eligibility for group health coverage may be able to enroll in a different parent's plan.
To have a special enrollment opportunity, you or your dependent must:
Losing your job-based health coverage also gives you an opportunity to enroll in the Health Insurance Marketplace. The Marketplace allows you to find and compare private health insurance options. Through the Marketplace, you may qualify for a tax credit that lowers your monthly premiums and reduces cost-sharing responsibilities, such as deductibles, coinsurance, and copayments.
Being offered COBRA continuation coverage doesn't mean you are ineligible for Marketplace coverage or for a tax credit. You can apply for Marketplace coverage at HealthCare.gov or by calling 1-800-318-2596 (TTY 1-855-889-4325).
To special enroll in a Marketplace plan, you must select a plan within 60 days before or after losing your job-based coverage. However, anyone can enroll in Marketplace coverage during an open enrollment period.
If you need health coverage for medical care in the time between losing your job-based coverage and beginning coverage through the Marketplace, you may wish to elect COBRA coverage from your former employer's plan. You then will have health coverage until the Marketplace coverage begins.
If you or your dependent elects COBRA continuation coverage and experiences a new special enrollment event, you can request special enrollment in another group health plan or a Marketplace plan. Special enrollment events include marriage, the birth of a child, or if you exhaust your COBRA coverage.
To exhaust COBRA coverage, you or your dependent must reach the maximum period of COBRA coverage available without early termination. If you choose to terminate your COBRA coverage early with no special enrollment opportunity available at that time, you will have to wait until the next open enrollment period to enroll in coverage through another group health plan or the Marketplace.
Through the Marketplace, you can also learn if you qualify for free or low-cost coverage from Medicaid or the Children's Health Insurance Program (CHIP). You can apply for and enroll in Medicaid and CHIP at any time. If you qualify, your coverage begins immediately.
Visit HealthCare.gov or call 1-800-318-2596 (TTY 1-855-889-4325) for more information or to apply for these programs.
You can also apply for Medicaid by contacting your state Medicaid office. You can learn more about your state's CHIP program by calling 1-877-KIDS NOW (543-7669) or visiting InsureKidsNow.gov.
Medicare is the federal health insurance program for people who are 65 or older and certain younger people with disabilities or end-stage renal disease. Medicare Part A helps cover inpatient hospital care, and Medicare Part B helps cover other medical care, such as visits to the doctor, outpatient care, and preventive services.
Generally, if you lose your job after your Medicare initial enrollment period and you did not enroll in Medicare Part A or B, you have an eight-month special enrollment period, beginning the month after your employment ends or the month after your group health coverage ends, whichever is earlier.
If you elect COBRA continuation coverage instead of Medicare, you may have to pay a late enrollment penalty and may have a gap in coverage if you later decide you want Part B. If you enroll in Medicare Part A or B before your COBRA coverage ends, your plan may terminate your COBRA coverage. However, if Medicare Part A or B is effective on or before the date you elect COBRA, your plan cannot discontinue your COBRA coverage because of Medicare, even if you enroll in the other part of Medicare after you elect COBRA coverage.
Generally, if you are enrolled in both COBRA and Medicare, Medicare will be the primary payer and COBRA coverage will pay second. The secondary payer might not pay all of the uncovered costs. Certain plans may pay as if secondary to Medicare, even if you are not enrolled in Medicare. For more information, visit Medicare's website.
You must meet three basic requirements to be entitled to elect COBRA continuation coverage:
COBRA covers group health plans sponsored by an employer (private-sector or state/local government) that had at least 20 employees on more than 50 percent of its typical business days in the previous calendar year.
Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of a full-time employee, with the fraction equal to the number of hours worked divided by the hours an employee must work to be considered full-time.
For example, if full-time employees work 40 hours per week, a part-time employee who works 20 hours per week counts as half of a full-time employee, and a part-time worker who works 16 hours per week counts as four-tenths of a full-time employee.
"Qualifying events" are events that cause you to lose group health coverage. The type of qualifying event determines who the qualified beneficiaries are and the period of time that a plan must offer continuation coverage. COBRA only establishes the minimum requirements for continuation coverage. A plan can choose to provide longer periods of continuation coverage or to contribute to the cost.
The following are qualifying events for a covered employee if they cause coverage loss:
The following are qualifying events for a spouse and dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:
In addition to the above, the following is a qualifying event for a dependent child of a covered employee if it causes the child to lose coverage:
A qualified beneficiary is an employee who, on the day before a qualifying event occurred, was covered by a group health plan by being a covered employee or a covered employee's spouse, former spouse, or dependent child. The type of qualifying event determines who can become a qualified beneficiary.
Some other individuals may be considered a qualified beneficiary. In certain cases involving employer bankruptcy, a retired employee and their spouse, former spouse, or dependent children may be qualified beneficiaries. Any child born to or placed for adoption with a covered employee during a period of continuation coverage is automatically considered a qualified beneficiary. An employer's agents, independent contractors, and directors who participate in the group health plan may also be qualified beneficiaries.
Under COBRA, group health plans must provide you and your family with specific notices explaining your COBRA rights. Plans must also have procedures for how COBRA continuation coverage is offered, how qualified beneficiaries may elect continuation coverage, and when it can be terminated.
The COBRA rights provided under the plan must be described in the plan's Summary Plan Description (SPD). The SPD is a written document that gives important information about the plan, including what benefits are available, the rights of the plan's participants and beneficiaries, and how the plan works.
The Employee Retirement Income Security Act (ERISA) requires group health plans to give you an SPD within 90 days after you become a plan participant (or within 120 days after the plan becomes subject to ERISA).
If there are material changes to the plan, the plan must give you a Summary of Material Modifications (SMM) no later than 210 days after the end of the plan year in which the changes become effective. If participants would consider the change to be an important reduction in covered services or benefits, the plan administrator must give you the SMM within 60 days after the reduction is adopted. If a covered participant or beneficiary requests in writing a copy of these or any other plan documents, the plan administrator must provide them within 30 days.
Group health plans must give each employee and their spouse a general notice describing their COBRA rights within the first 90 days of coverage. Some plans do this by including the general notice in the SPD.
The general notice must include:
A group health plan must offer you continuation coverage if a qualifying event occurs. Depending on the type of qualifying event, either you or your employer must notify the plan of the qualifying event. The plan is not required to act until it receives an appropriate notice.
The employer must notify the plan within 30 days after the event if the qualifying event is:
You (the covered employee or another qualified beneficiary) must notify the plan if the qualifying event is:
You should understand your plan's rules for how to provide notice if one of these qualifying events occurs. Group health plans must have procedures in both the general notice and the SPD for how you can provide notice. The plan can set a time limit for providing this notice, but the time limit cannot be less than 60 days, starting from the latest of:
If your plan does not have reasonable procedures for how to give notice of a qualifying event, you can give notice by contacting the person or unit that handles your employer's employee benefits matters (such as the human resources department). If your plan is a multiemployer plan, notice can also be given to the joint board of trustees, and, if the plan is administered by an insurance company (or the benefits are provided through insurance), notice can be given to the insurance company.
After the plan receives notice of a qualifying event, it must provide the qualified beneficiaries with an election notice within 14 days.
The election notice describes your rights to continuation coverage and how to make an election. It should contain all of the information you will need to understand continuation coverage and make an informed decision about it. It should also provide the name of the plan's COBRA administrator and tell you how to get more information.
Group health plans may sometimes deny a request for continuation coverage or for an extension of continuation coverage. When a plan denies your or your family member's request for continuation coverage or an extension, the plan must give you or your family member a notice of unavailability of continuation coverage within 14 days after the request is received and explain the reason for denying the request.
Continuation coverage must generally be available for up to 18, 29, or 36 months. However, the group health plan may terminate continuation coverage early, for specific reasons. (See Duration of Continuation Coverage.)
When a group health plan decides to terminate continuation coverage early, the plan must give the qualified beneficiary a notice of early termination. The notice must be given as soon as practicable after the decision is made, and it must include the date coverage will terminate, the reason for termination, and any rights the beneficiary may have under the plan or applicable law to elect alternative group or individual coverage.
Multiemployer plans are allowed to adopt some special rules for COBRA notices, such as setting its own time limits for the qualifying event notice or the election notice. A multiemployer plan also may choose not to require employers to provide qualifying event notices, as the plan administrator will determine when a qualifying event has occurred. Any special multiemployer plan rules must be set out in the plan's documents and SPD.
Your plan must give you at least 60 days to choose whether or not to elect COBRA coverage, beginning from the date the election notice is provided or the date you would otherwise lose health coverage due to the qualifying event, whichever is later.
Each qualified beneficiary has an independent right to elect continuation coverage. This means that if both you and your spouse are entitled to elect continuation coverage, you each can make a different choice. The plan must allow you or your spouse to elect continuation coverage on behalf of all of the other qualified beneficiaries for the same qualifying event, if the election does not specify it is for self-only coverage. A parent or legal guardian of a qualified beneficiary must also be allowed to elect on behalf of a minor child.
If you waive continuation coverage during the election period, you must be permitted to later revoke your coverage waiver and elect continuation coverage, as long as you do so before the election period ends. In such cases, continuation coverage may begin on the date you revoked the waiver.
Certain Trade Adjustment Assistance (TAA) Program participants have a second opportunity to elect COBRA continuation coverage:
This second election period begins 60 days from the first day of the month in which an individual is determined eligible for the TAA benefits listed above and receives such benefits.
For example, if you are eligible and your general election period runs out at the beginning of the month, you would have approximately 60 more days to elect COBRA. But if you meet the eligibility criteria at the end of the month, the 60 days began on the first of the month, in effect giving you about 30 days. You must elect COBRA no later than six months after TAA-related loss of coverage. COBRA coverage chosen during the second election period typically begins on the first day of that period.
The continuation coverage must be identical to the coverage currently available under the plan to similarly situated active employees and their families. Generally, this is the same coverage that you had immediately before the qualifying event.
You must receive the same benefits, choices, and services that a similarly situated participant or beneficiary receives, including the right to choose among available coverage options during an open enrollment season.
You are also subject to the same rules and limits, such as co-payment requirements, deductibles, and coverage limits. The plan's rules for filing benefit claims and appealing any claims denials also apply. Any changes made to the plan's terms that apply to similarly situated active employees and their families will also apply to qualified beneficiaries receiving COBRA continuation coverage.
If you give birth or adopt a child during a period of continuation coverage, your child is automatically considered to be a qualified beneficiary. The plan must allow your child to be added to the continuation coverage.
COBRA requires continuation coverage to last for 18 or 36 months after the date of the qualifying event. The length of time for which continuation coverage must be made available depends on the type of qualifying event.
| Qualifying Event | Required Period of Continuation Coverage |
|---|---|
| Termination of employment for reasons other than gross misconduct | 18 months |
| Reduction in work hours | 18 months |
| Termination of employment and the employee became entitled to Medicare less than 18 months earlier | Up to 36 months after date the employee became entitled to Medicare |
| Reduction in work hours and the employee became entitled to Medicare less than 18 months earlier | Up to 36 months after date the employee became entitled to Medicare |
| All other qualifying events | 36 months ( 1 ) |
However, a plan may provide longer periods of coverage beyond what is required by law.
A group health plan may terminate continuation coverage earlier than the end of the maximum period for any of the following reasons:
If continuation coverage is terminated early, the plan must provide the qualified beneficiary with an early termination notice. (See COBRA Notice and Election Procedures.)
If you decide to terminate your COBRA coverage early, you generally won't be able to enroll in a Marketplace plan outside of the open enrollment period. (See Alternatives to COBRA Continuation Coverage.)
There are two circumstances in which individuals entitled to 18 months of continuation coverage can become eligible for an extension of coverage: the first is when a qualified beneficiary is disabled; the second is when a second qualifying event occurs.
If one of the qualified beneficiaries in your family is disabled and meets certain requirements, all of the qualified beneficiaries in your family are entitled to an 11-month extension of continuation coverage (for a total maximum period of 29 months). The plan can charge an increased premium, up to 150 percent of the cost of coverage, during the 11-month disability extension.
The requirements are: (1) the Social Security Administration (SSA) must determine the qualified beneficiary is disabled before the 60th day of continuation coverage and (2) the disability must continue during the rest of the 18-month period of continuation coverage.
The qualified beneficiary who is disabled (or another person on their behalf) must notify the plan of the SSA determination. The plan can set a time limit for providing this notice of disability, but the time limit cannot be less than 60 days, starting from the latest of:
The right to the disability extension may be terminated if SSA determines that the beneficiary is no longer disabled. The plan can require qualified beneficiaries to provide notice when such a determination is made. The plan must give at least 30 days after the SSA determination to provide such notice.
The rules for how to give a disability notice and a notice of no longer being disabled should be described in the plan's SPD (and in the election notice for any offer of an 18-month period of continuation coverage).
An 18-month extension may be available while you are receiving 18 months of coverage (giving a total of 36 months of continuation coverage) if you experience a second qualifying event, such as death of a covered employee, divorce or legal separation of the covered employee and spouse, Medicare entitlement (in certain circumstances), or loss of dependent child status under the plan. The second event can be a second qualifying event only if it would have caused you to lose coverage under the plan in the absence of the first qualifying event.
You will need to notify the plan if a second qualifying event occurs. The rules for giving this notice should be described in the plan's SPD (and in the election notice for any offer of an 18-month period of continuation coverage). The plan can set a time limit for providing this notice, but the time limit cannot be less than 60 days from the latest of:
The following chart shows the maximum period for which continuation coverage must be offered for the specific qualifying events and the qualified beneficiaries who are entitled to elect continuation coverage when the event occurs. Note that an event is a qualifying event only if it causes the qualified beneficiary to lose coverage under the plan.
| Qualifying Event | Qualified Beneficiaries | Maximum Period of Continuation Coverage |
|---|---|---|
| Termination (for reasons other than gross misconduct) or reduction in hours of employment | Employee Spouse Dependent Child | 18 months ( 2 ) |
| Employee enrollment in Medicare | Spouse Dependent Child | 36 months ( 3 ) |
| Divorce or legal separation | Spouse Dependent Child | 36 months |
| Death of employee | Spouse Dependent Child | 36 months |
| Loss of "dependent child" status under the plan | Dependent Child | 36 months |
Your group health plan can require you to pay for COBRA continuation coverage. The maximum amount charged cannot exceed 102 percent of the cost to the plan for similarly situated individuals covered under the plan who have not incurred a qualifying event. In calculating COBRA premiums, the plan can include the costs paid by both you and your employer, plus an additional 2 percent for administrative costs.
If you receive the 11-month disability extension of continuation coverage, the premium for those additional months may be increased to 150 percent of the plan's total cost of coverage.
Plans may increase your COBRA premium if the cost to the plan increases, but plans must generally fix premiums before each 12-month premium cycle. The plan must allow you to pay the required premiums on a monthly basis if you ask to do so and may allow payments at other intervals (for example, weekly or quarterly). The COBRA election notice should describe all of the necessary information about COBRA premiums, when they are due, and the consequences of late payment and nonpayment.
The plan cannot require you to pay a premium when you make the COBRA election. It must provide at least 45 days after you elect COBRA for you to make an initial premium payment. If you fail to make any payment before the end of the initial 45-day period, the plan can terminate your COBRA rights. The plan should set due dates for any subsequent premium payments, but it must provide a minimum 30-day grace period for each payment.
If you do not pay a premium by the first day of a coverage period, but you pay it within the grace period, the plan may cancel your coverage until payment is received and then reinstate the coverage retroactively back to the beginning of the period. The plan can terminate coverage if full payment is not received before the end of a grace period.
If the amount of a payment made to the plan is incorrect but not significantly less than the amount due, the plan must notify you of the deficiency and grant a reasonable period (for this purpose, 30 days is considered reasonable) to pay the difference. The plan is not obligated to send monthly premium notices, but it must provide a notice of early termination if it terminates your continuation coverage due to your failure to make a timely payment.
As part of a severance agreement, some employers may subsidize or pay the entire cost of health coverage, including COBRA coverage, for terminating employees and their families. If you are receiving this type of benefit, talk to your plan administrator about how this impacts your COBRA coverage or your special enrollment rights.
The Health Coverage Tax Credit expired on December 31, 2021. If you have questions about the Health Coverage Tax Credit, visit the IRS's website.
The Family and Medical Leave Act (FMLA) requires employers to maintain group health insurance coverage for employees who are on FMLA leave under the same terms and conditions coverage would have been provided if the employee was currently working. An employee may choose not to retain group health plan coverage during FMLA leave. However, when an employee returns from the leave, the employee is entitled to be reinstated on the same terms as prior to taking the leave, including family or dependent coverages, without any qualifying period, physical examination, exclusion of pre-existing conditions, etc.
Group health coverage that is provided under the FMLA during a family or medical leave is not COBRA continuation coverage, and taking FMLA leave is not a qualifying event under COBRA. However, a COBRA qualifying event may occur when an employer no longer has an obligation to maintain health benefits under the FMLA, such as when an employee taking FMLA leave decides not to return to work and notifies an employer of their intent not to return.
The Affordable Care Act provides additional protections for coverage under an employment-based group health plan, including COBRA continuation coverage. These protections include:
Additional protections that may apply to your employer's plan include coverage for:
COBRA continuation coverage laws are administered by several agencies. The U.S. Departments of Labor and the Treasury have jurisdiction over private-sector group health plans. The U.S. Department of Health and Human Services administers the continuation coverage law as it applies to state and local government health plans.
The Labor Department's interpretive responsibility for COBRA is limited to the disclosure and notification requirements of COBRA. The Labor Department has issued regulations on the COBRA notice provisions. The Treasury Department has interpretive responsibility to define the required continuation coverage. The Internal Revenue Service, Department of the Treasury, has issued regulations on COBRA provisions relating to eligibility, coverage, and payment. The Departments of Labor and the Treasury share jurisdiction for enforcement of these provisions.
The Centers for Medicare and Medicaid Services offer information about COBRA for public-sector employees. To find out more, visit their website, contact the agency via email, or call toll free 1-888-393-2789 and leave a message. You should get a response in three to five business days.
Federal employees are covered by a federal law similar to COBRA. Those employees should contact the personnel office serving their agency for more information on temporary extensions of health benefits.
For more information on the Affordable Care Act, visit HealthCare.gov.
More information on the Family and Medical Leave Act is available at the Wage and Hours Division's website or toll free at 1-866-487-9243.
For more information on Medicare, visit Medicare.gov or call 1-800-MEDICARE.
For information on the Trade Adjustment Assistance (TAA) Program, visit the Employment and Training Administration's website.
For information about the Health Coverage Tax Credit, visit the IRS's website.