A Worker’s Guide to Health Benefits Under COBRA

COBRA is a federal law that allows you and your family to temporarily keep your job-based health coverage after certain life events. It generally applies to group health plans offered by private employers with 20 or more employees, as well as most state and local government plans.⁽¹⁾

What is a group health plan?

Under COBRA, a group health plan is any arrangement your employer provides to cover medical care for employees and their families. It doesn’t matter if the coverage comes through insurance, a health maintenance organization, an employer’s own funds, or another method.

Medical care includes: 

• Inpatient and outpatient hospital care.
• Physician care.
• Surgery and other major medical benefits.
• Prescription drugs.
• Dental and vision care. 

If your plan only provides life insurance or disability benefits, your plan isn’t covered by COBRA. 

COBRA eligibility

You may qualify for COBRA if you lose coverage due to events like: 

• Death of the covered employee.
• Termination of employment for any reason other than gross misconduct.
• Reduction in hours.
• Divorce or legal separation.
• A child losing dependent status under the plan.
• In limited situations, becoming entitled to Medicare.

COBRA coverage must be offered to covered employees, former employees, spouses, former spouses, and dependent children. COBRA continuation coverage lasts for a limited time.

Plans not covered by COBRA

COBRA does not apply to plans sponsored by the federal government, churches or certain church-related organizations. Many states have similar laws to COBRA, often called mini-COBRA, which apply to health plans maintained by employers with fewer than 20 employees. Contact your state insurance commissioner’s office to see if such coverage is available to you.

Alternatives to COBRA Continuation Coverage 

If you qualify for COBRA, take time to consider all your options before deciding. In some cases, other health coverage options may cost less or provide better care for you and your family. 

Other Group Health Plan Coverage

Under the Health Insurance Portability and Accountability Act (HIPAA), losing your job-based or COBRA coverage may open a special enrollment period for another group health plan. This means you can join a new plan right away instead of waiting for the next open enrollment. During this special enrollment period, you may be able to join:

• A spouse’s plan.
• A parent’s plan (if under 26).
• Your own employer’s plan.

You usually have only 30 days from the date you lose coverage to request this special enrollment. Coverage will be effective on the first day of the month following your request for enrollment.

Health Insurance Marketplace

You can find and compare private health insurance options through the government-run Health Insurance Marketplace. You may qualify for tax credits or cost-sharing reductions to lower your premiums and out-of-pocket costs.  

Apply for Marketplace coverage at HealthCare.gov or call (800) 318-2596 (TTY (855) 889-4325). You can apply for Marketplace coverage even if you are eligible for COBRA.

You must select a Marketplace plan within 60 days of losing your job-based coverage. During the open enrollment period, anyone can enroll in Marketplace coverage. 

If you need coverage right away, COBRA may help bridge the gap until your Marketplace coverage starts.

Medicaid and CHIP

Through the Marketplace, you can find out if you qualify for free or low-cost coverage from Medicaid or the Children’s Health Insurance Program (CHIP). You can apply any time, and if you are eligible, your coverage starts immediately. 

For more information or to apply for these programs, visit HealthCare.gov or call (800) 318-2596 (TTY (855) 889-4325). 

You can also apply for Medicaid by contacting your state Medicaid office. To learn more about your state’s CHIP program, call (877) KIDS NOW (877) 543-7669 or visit InsureKidsNow.gov.

Medicare

Medicare is the federal health insurance program for people 65 or older and certain younger people with disabilities or end-stage renal disease. 

• Medicare Part A helps cover inpatient hospital care.
• Medicare Part B helps cover other medical care, such as doctor visits, outpatient care, and preventive services. 

For more information, visit medicare.gov.

To qualify for COBRA continuation coverage, you must meet these three requirements: 

• Your group health plan must be covered by COBRA.
• A qualifying event must occur.
• You must be a qualified beneficiary for that event. 

Covered Plans 

COBRA applies to group health plans sponsored by employers, whether in the private sector or state and local government, that had at least 20 employees on more than half of their typical business days in the previous calendar year. 

Both part-time and full-time employees count toward the 20-employee requirement. A part-time employee is counted as a fraction, calculated by dividing their hours worked by the hours required for full-time employment. 

Qualifying Events 

Qualifying events are certain events that cause you to lose group health coverage. The type of qualifying event determines who qualifies for COBRA continuation coverage and how long that coverage must be offered.

Qualifying events for the employee include: 

• Job loss (except for gross misconduct).
• Reduction in work hours. 

Qualifying events for the employee’s spouse and dependents include: 

• The covered employee’s job loss (except for gross misconduct).
• Reduction in the covered employee’s work hours.
• Divorce or legal separation from the covered employee.
• Death of the covered employee.
• Loss of dependent child status.
• In limited situations, the covered employee becomes entitled to Medicare.

Qualified Beneficiaries

Qualified beneficiaries are individuals covered by a group health plan on the day before a qualifying event. Qualified beneficiaries include:

• The covered employee.
• The covered employee’s spouse or former spouse.
• The covered employee’s dependent children. 

In certain cases, other individuals may be considered qualified beneficiaries, including:

• Retired employees, their spouses or former spouses, and dependent children if their employer sponsoring their group health plan declares bankruptcy.
• Any child born to or placed for adoption with a covered employee during the COBRA coverage period.
• Employer’s agents, independent contractors, and directors who were covered under the employer’s group health plan.

COBRA Notice and Election Procedures 

Under COBRA, your group health plan must provide you and your family with specific notices about your COBRA rights. The plan also has rules for how COBRA coverage is offered, how you can elect it, and when it may end. 

Notice Procedures 

COBRA General Notice 

Within the first 90 days of coverage, your group health plan must provide you and your spouse with a COBRA General Notice. The notice must include:

• The plan name and contact information—including name, address, and telephone number—of someone who can answer questions about COBRA and the plan.
• A general description of the continuation coverage provided under the plan.
• Instructions for notifying the plan about certain qualifying events or disabilities.

Keep in mind: Some plans include the COBRA General Notice in the plan’s Summary Plan Description (SPD). The SPD is a written document that provides key information about the plan, including the available benefits, the rights of 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).

COBRA Qualifying Event Notice 

Your group health plan must offer you continuation coverage if a qualifying event occurs. Depending on the type of event, either you or your employer must notify the plan. 

The employer must notify the plan within 30 days⁽²⁾ after the following qualifying events: 

• Termination or reduction in the covered employee’s hours.
• Death of the covered employee.
• The covered employee becoming entitled to Medicare.
• Employer bankruptcy. 

You (the covered employee or another qualified beneficiary) must notify the plan if the qualifying event is:

• Divorce.
• Legal separation.
• A child's loss of dependent status under the plan. 

Important: The plan is not required to act until it receives proper notice. Always check your plan's rules for how to provide notice and make sure you follow them. 
Your plan can set a deadline for providing notice in cases where you or your family must notify the plan of
a qualifying event. This deadline cannot be less than 60 days starting from the latest of:

• The date the qualifying event occurs,
• The date you lose (or would lose) coverage under the plan because of the qualifying event, or
• The date you are informed, via the COBRA general notice or plan’s SPD, of your responsibility to notify the plan and the procedures for doing so. 

Not sure who to notify? If your plan doesn’t give clear instructions, you can always notify the person or office at your job who handles benefits, like Human Resources. If you’re in a multiemployer plan, you can notify the joint board of trustees. 

COBRA Election Notice 

Once your plan receives notice of a qualifying event, it must provide qualified beneficiaries with an election notice within 14 days. This notice explains your COBRA rights, how to enroll in COBRA coverage, and who to contact for any questions. 

COBRA Notice of Unavailability of Continuation Coverage 

If you or any qualified beneficiary request COBRA coverage or an extension and the plan denies it, the plan must send a notice of unavailability within 14 days. This notice will explain why the request was denied.

COBRA Notice of Early Termination of Continuation Coverage 

Your continuation coverage is typically available for up to 18, 29, or 36 months. However, your group health plan may terminate this coverage early for specific reasons (See section on “Duration of Continuation Coverage”). If this happens, your plan must provide qualified beneficiaries with a notice of early termination.

This notice must include:

• The date coverage will end.
• The reason for termination.
• Information about any rights the qualified beneficiary has under the plan or applicable law to choose alternative coverage.

Special Rules for Multiemployer Plans 

If your health coverage is through a union, you might be covered under a multiemployer plan. These plans can follow special rules for COBRA notices, including:

• Setting their own time limits for issuing qualifying event and election notices.
• Allowing the plan administrator, not the employer, to determine when a qualifying event occurs.

Any special rules for multiemployer plans must be included in your plan's documents and SPD.

Election Procedures 

If you qualify for COBRA continuation coverage, you have at least 60 days to decide whether to enroll. The 60-day election period begins on the later of:

• The date the plan provides the election notice, which may be the date it is mailed, or
• The date you would otherwise lose coverage.

Individual Election Rights

Each qualified beneficiary has the right to make their own decision about electing COBRA. For example, you may choose COBRA while your spouse and dependents decide not to. A parent or guardian can also elect coverage for a minor dependent.  

If you waive continuation coverage during the election period, you can change your mind and elect COBRA later by revoking the waiver—so long as it’s within the 60-day election period. Your COBRA coverage may start from the date you elect it or be retroactive to the date coverage was lost depending on the plan rules. 
 

When you elect COBRA, your coverage generally does not change. You’ll receive benefits under the same plan you had as an active employee. If you are eligible for, but not enrolled in Medicare, the plan may contain a coordination of benefit rule that applies Medicare as primary coverage, even if you have not enrolled in Medicare. 

Coverage Stays the Same

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’ll still have:

• Access to open enrollment.
• The same co-pays, deductibles, and coverage limits.
• The same process for filing claims and appealing denied claims.

Any changes made to the plan for active employees will also apply to you. And if you welcome a new child—by birth or adoption— review the plan eligibility rules for adding dependents to your COBRA coverage.

Maximum Periods 

The following chart shows the maximum period of continuation coverage, based on the type of qualifying event and the qualified beneficiaries eligible for coverage. Note that an event is a qualifying event only if it causes the qualified beneficiary to lose coverage under the plan.

Early Termination 

You may lose COBRA coverage before the maximum period ends if certain events occur:

• Premiums are not paid in full or on time.
• The employer stops maintaining any group health plan.
• A qualified beneficiary begins coverage under another group health plan.
• A qualified beneficiary becomes entitled to Medicare benefits after electing COBRA.
• A qualified beneficiary commits fraud or other conduct that would justify terminating coverage. 

If your plan terminates COBRA early, it must provide you with an early termination notice. (See section on “COBRA Notice and Election Procedures.”) 

If you end your COBRA coverage early, you generally cannot enroll in Marketplace coverage until the next open enrollment. (See section on "Alternatives to COBRA Continuation Coverage.")

Extension of an 18-month Period of Continuation Coverage 

Group health plans must allow you to extend continuation coverage beyond 18 months if:

• A qualified beneficiary is eligible for a disability extension, or
• A second qualifying event occurs. 

Disability Extension 

If a qualified beneficiary in your family is disabled and meets certain requirements, all qualified beneficiaries in your family can receive an 11-month extension of COBRA, extending coverage for up to 29 months total. 

A qualified beneficiary is eligible for a disability extension if:

• The Social Security Administration (SSA) determines that the qualified beneficiary is disabled,
• This determination is made before the 60th day of continuation coverage,⁽⁵⁾  and
• The disability continues through the initial 18-month period of continuation coverage.

To receive a disability extension, qualified beneficiaries (or someone on their behalf) must notify the plan of the SSA determination. The plan can set a deadline for this notice, but it cannot be shorter than 60 days, starting from the latest of: 

• The date SSA issues the disability determination,
• The date the qualifying event occurs,
• The date the qualified beneficiary loses (or would lose) coverage under the plan due to the qualifying event, or
• The date the qualified beneficiary is informed, through the SPD or the COBRA general notice, about the responsibility and procedures for notifying the plan.

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 this determination is made. The plan must allow at least 30 days for qualified beneficiaries to provide notice following the SSA determination. 

The extension is available to all qualified beneficiaries even if the disabled qualified beneficiary does not elect COBRA or continue coverage through the 11-month disability extension.  If the disabled qualified beneficiary does not receive COBRA during the extended period, the plan may charge 102 percent of the COBRA premium to the non-disabled qualified beneficiaries who continue coverage. If the disabled qualified beneficiary receives COBRA during the 11-month extension, the plan may charge up to 150 percent of the premium. 

Your plan’s SPD and COBRA election notice include instructions on how to notify the plan about a disability and how to report when the disability ends. 

Second Qualifying Event 

Your COBRA coverage may be extended beyond 18 months—up to a maximum total of 36 months—if a second qualifying event happens while you’re already receiving COBRA.

Examples of second qualifying events include:

• Death of the covered employee.
• Divorce or legal separation from the covered employee.
• The covered employee becomes entitled to Medicare (in certain circumstances).
• Loss of dependent child status under the plan.

The second event only qualifies if it would have caused you to lose coverage under the plan had the first qualifying event not occurred.

You must notify the plan if a second qualifying event occurs. The instructions for how and when to give notice should be in your plan’s SPD or COBRA election notice.

Your plan can set a deadline for providing this notice, but it must allow at least 60 days, starting from the latest of: 

• The date the qualifying event occurs,
• The date you lose (or would lose) coverage under the plan due to the qualifying event, or
• The date you are informed, through either the SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.

COBRA provides a temporary extension of health coverage, but it often comes with new financial responsibilities. Once you elect COBRA, you’re responsible for the full cost of coverage. If a third-party payment source is available, that party is allowed to make payment on behalf of the qualified beneficiary.

Some employers may agree to cover part or all of the costs as part of a severance package. This isn’t required, but if you receive this type of benefit, contact your plan administrator about it how it affects paying for your COBRA coverage.  

Maximum Premiums 

Your premium cannot exceed 102 percent of the plan’s total cost of providing you with coverage. The total premium includes both the share you used to pay as an active employee and the amount your employer used to contribute, plus two percent.

If you qualify for an 11-month disability extension, your plan can charge you up to 150 percent of the total cost while the disabled beneficiary also is receiving COBRA coverage during the additional 11 months.

Your plan can also raise premiums if the cost of the plan itself goes up. You change coverage options during open season or add a dependent during a special enrollment period.

Payment Schedule

When you elect COBRA, your plan must give you the option to pay premiums monthly. Some plans may also allow you to pay on a different schedule, such as weekly or quarterly. 

Initial Payment 

You don’t have to pay premiums when you first elect COBRA. Plans must give you at least 45 days to make your first payment. If you don’t make the initial payment within those 45 days, your plan can terminate your COBRA coverage. COBRA coverage may not be active until the premium is paid.

Ongoing Payments 

Once you’ve paid your initial payment, you’ll have to pay ongoing premiums by a set due date. Your plan doesn’t have to send you a bill. You’re responsible for making timely payments even if you don’t receive a billing statement. 

Late Payments and Termination

Plans must give you a 30-day grace period each month. Paying within the grace period keeps your coverage in place. If coverage is suspended, it will be reinstated if the premium is paid before the grace period ends. Failure to pay in full by the end of the grace period can end your COBRA coverage.

If your payment is incorrect, but not significantly less than the amount due, plans may notify you of the payment error and allow you at least 30 days to pay the difference.⁽⁶⁾

Medicare

If you become eligible for Medicare, such as turning 65, that alone doesn’t trigger COBRA coverage. COBRA only applies if you lose your job-based coverage because of qualifying events like job loss or reduced hours.  

Here’s how Medicare and COBRA work together:
 

Important: Choosing COBRA coverage without also enrolling in Medicare may create unexpected financial obligations. Qualified beneficiaries who are eligible for Medicare but haven’t enrolled may have Medicare treated as their primary insurance. Once COBRA starts, this can affect how medical claims are paid. Always check your plan’s SPD or talk to your plan administrator to understand how the plan coordinates payment with Medicare.

For more information on Medicare, visit Medicare.gov or call (800) MEDICARE.

Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) protects your health coverage while you’re on approved FMLA leave. Your employer must keep your group health coverage the same as if you were still actively working.

FMLA is not COBRA continuation coverage. Taking FMLA leave does not make you eligible for COBRA. You may become eligible if your FMLA leave ends and you choose not to return to work. 

Affordable Care Act

The Affordable Care Act (ACA) provides additional protections for coverage under a job-based group health plan, including COBRA continuation coverage. These protections include:

• Extending dependent child coverage to age 26.
• Prohibiting limits or exclusions from coverage for preexisting conditions.
• Banning lifetime or annual dollar limits on coverage for essential health benefits.
• Requiring group health plans and insurers to provide an easy-to-understand summary of a health plan’s benefits and coverage. 

Some plans may also cover: 

• Certain preventive services without cost sharing, such as blood pressure, diabetes and cholesterol tests; regular well-baby and well-child visits; routine vaccinations; and various cancer screenings.
• Emergency services at an out-of-network hospital without requiring prior approval.

Several federal agencies oversee COBRA continuation coverage laws.

The Departments of Labor and the Treasury oversee COBRA as it applies to private-sector group health plans while the Department of Health and Human Services administers COBRA in relation to state and local government health plans.

The Department of Labor’s interpretive responsibility is limited to COBRA’s disclosure and notification requirements. It has issued regulations on the COBRA notice provisions. 

The Treasury Department has interpretive responsibility for defining the required continuation coverage under COBRA, and through its Internal Revenue Service has issued CORBA regulations covering eligibility, coverage, and payment. The Departments of Labor and Treasury share enforcement responsibilities for these COBRA regulations.