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Division of Insurance - COBRA
COBRA and State Continuation for Employers
| 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 |
| Employee enrollment in Medicare | Spouse Dependent Child |
36 months |
| 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 |
Frequently Asked Questions About COBRA*
*Resources used and quoted information for this web page obtained from the FAQs on COBRA Continuation Health Coverage and An Employer's Guide to Group Health Continuation Coverage Under COBRA as issued by the U.S. Department of Labor Employee Benefits Security Administration (EBSA).
General Questions about COBRA
What is COBRA and what does it do?
What group health plans are subject to COBRA?
What state continuation protections are available?
Can I receive COBRA benefits while on FMLA leave?
Questions about Employee and Beneficiary Rights under COBRA
What benefits must be covered under COBRA?
Who is entitled to continuation of coverage under a group health plan?
When is an employee eligible for COBRA continuation coverage?
Is a divorced spouse entitled to COBRA coverage from their former spouses' group health plan?
How long after a qualifying event does an employee have to elect COBRA coverage?
Is notice of unavailability of continuation coverage required?
If I waive COBRA coverage during the election period, can I still get coverage at a later date?
What options are there to decrease benefits?
When can there be early termination of continuation coverage?
If I did not make the premium payment on time and my coverage was canceled, what can I do?
What is COBRA and what does it do?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions was passed by Congress in 1986. The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.
COBRA requires group plans to offer continuation coverage to covered employees, former employees, spouses, former spouse, and dependent children when group health coverage would otherwise be lost due to certain specific events, referred to as qualifying events.
COBRA continuation coverage laws are administered by several agencies in the Federal Government. The U.S. Departments of Labor and Treasury have jurisdiction over private-sector health group plans. The U.S. Department of Health and Human Services (HHS) administers the continuation coverage law as it affects state and local governmental health plans.
The U.S. Department of Labor's interpretive and regulatory responsibility is limited to the disclosure and notification requirements of COBRA. The Internal Revenue Service, Department of the Treasury, has issued regulations on COBRA provisions relating to eligibility, coverage and payment. Both the Departments of Labor and Treasury share jurisdiction for enforcement of these provisions. The Centers for Medicare and Medicaid Services, as part of HHS, offers information about COBRA provisions for public-sector employees.
What group health plans are subject to COBRA?
COBRA generally applies to all private-sector group health plans maintained by employers having at least 20 employees on more than 50 percent of their typical business days in the previous calendar year or by state or local governments. The law does not apply to plans sponsored by the Federal Government or by churches and certain church-related organizations.
What state continuation protections are available?
There is a special type of continuation coverage available in South Dakota. It provides that every policy of group health insurance must, if the employer ceases operations and terminates the policy or contract, have coverage continued for the employees and their eligible dependents for a period of 12 months, for which the employee and/or dependent shall be financially responsible.
In addition, if you, as an employer, either fail to submit premium payment to the insurance company resulting in loss of coverage to your employees or cancels the coverage and you do not notify the employees of such loss of coverage, the employees and their dependents are then eligible for continuation coverage, provided election is made within 60 days of the date of their being notified of the loss of coverage.
The employer shall provide notice of any nonpayment of premiums or cancellation of coverage to employees as soon as reasonably possible but no later than 10 days after the date of cancellation. If you, as an employer, fail to notify the employees and their dependents of the termination of coverage within 10 days, the employees and dependents may not be denied coverage by the insurer provided timely election is made after actual receipt of notice. Whether notice is provided or not, the election period for continuation of coverage may expire 90 days from the date the group coverage terminated.
Any former employee who is under continuation coverage at the time an employer ceases operation and terminates the policy, or fails to make premium payments resulting in loss of coverage, or cancels the insurance without notice, is eligible to remain on continuation coverage for the remainder of the continuation term or 12 months, whichever is less, if timely election is made and continuation payments are received.
For purposes of this section, the phrase "employer ceasing operations" means the business has closed or discontinued its business operations or, in the case of a sole proprietorship or an owner-operated business, the sale of such business that results in the purchaser establishing its own taxpayer identification number.
Continuation is only available to an employee who has been continuously insured under the group policy or under any creditable coverage which it replaced during the entire six-month period ending with such termination.
Can I receive COBRA benefits while on FMLA leave?
The Family and Medical Leave Act (FMLA) requires an employer to maintain coverage under any group health plan for an employee on FMLA leave under the same condition's coverage would have been provided if the employee had continued working. Coverage provided under the FMLA is not COBRA coverage and taking FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer's obligation to maintain health benefits under FMLA ceases, such as when an employee taking FMLA leave decides not to return to work and notifies an employer of his or her intent not to return to work. Further information on the FMLA is available on the website of the U.S. Department of Labor's Wage and Hour Division at dol.gov/whd or by calling 866.487.9243.
What benefits must be covered under COBRA?
If you elect continuation coverage, the coverage you are given 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 will also be entitled, while receiving continuation coverage, to the same benefits, choices, and services that a similarly situated participant or beneficiary is currently receiving under the plan, such as the right during open enrollment season to choose among available coverage options. You will also be subject to the same rules and limits that would apply to a similarly situated participant or beneficiary, 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 change 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 a child is born to or adopted by a covered employee during a period of continuation coverage, the child is automatically considered to be a qualified beneficiary receiving continuation coverage. You should consult your plan for the rules that apply for adding your child to continuation coverage under those circumstances.
Who is entitled to continuation coverage under a group health plan?
A group health plan is required to offer COBRA only to qualified beneficiaries and only after a qualifying event has occurred.
When is an employee eligible for COBRA continuation coverage?
An employee must have been enrolled in the employer's health plan when working, and the health plan must continue to be in effect for the active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for COBRA continuation coverage, cause an individual to lose his or her health care coverage.
Is a divorced spouse entitled to COBRA coverage from their former spouses' group health plan?
Under COBRA, participants, covered spouses and dependent children may continue their plan coverage for a limited time when they would otherwise lose coverage due to a particular event, such as divorce (or legal separation). A covered employee's spouse who would lose coverage due to a divorce may elect continuation coverage under the plan for a maximum of 36 months. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation. After being notified of a divorce, the plan administrator must give notice, generally within 14 days, to the qualified beneficiary of the right to elect COBRA continuation coverage.
How long after a qualifying event does an employee have to elect COBRA coverage?
If you are entitled to elect COBRA coverage, you must be given an election period of at least 60 days (starting on the later of the date you are provided the election notice or the date you would lose coverage) to choose whether to elect continuation coverage.
Each of the qualified beneficiaries for a qualifying even may independently elect COBRA coverage. This means that if both you and your spouse are entitled to elect continuation coverage, you each may decide separately whether to do so. The covered employee or spouse must be allowed to elect on behalf on any dependent children or on behalf of all of the qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child.
Is the notice of unavailability of continuation coverage required?
Group health plans may sometimes deny a request for continuation coverage or for an extension of continuation coverage, when the plan determines the requester is not entitled to receive it. When a group health plan makes the decision to deny a request for continuation coverage or a request for an extension from an individual, the plan must give the individual a notice of unavailability of continuation of coverage. The notice must be provided within 14 days after the request is received, and the notice must explain the reason for denying the request.
If I waive COBRA coverage during the election period, can I still get coverage at a later date?
If you waive COBRA coverage during the election period, you must be permitted later to revoke your waiver of coverage and to elect continuation coverage as long as you do so during the election period. Then, the plan need only provide continuation coverage beginning on the date you revoke the waiver.
In addition, certain Trade Adjustment Assistance (TAA) Program participants have a second opportunity to elect COBRA continuation coverage. Individuals who are eligible and receive Trade Readjustment Allowances (TRA), individuals who would be eligible to receive TRA, but have not yet exhausted their reemployment assistance (RA) [formerly unemployment insurance (UI)] benefits, and individuals receiving benefits under Alternative Trade Adjustment Assistance (ATAA) or Reemployment Trade Adjustment Assistance (RTAA), and who did not elect COBRA during the general election period, may get a second election period. This additional, second election period is measured 60 days from the first day of the month in which the individual is determined eligible for the TAA benefits listed above and receives such benefit. For example, if an individual's general election period runs out and he/she is determined eligible for TRA (or would be eligible for TRA but have not exhausted UI benefits) or begin to receive ATAA or RTAA benefits 61 days after separating from employment, at the beginning of the month, he/she would have approximately 60 more days to elect COBRA. However, if this same individual does not meet the eligibility criteria until the end of the month, the 60 days are still measured from the first of the month, in effect giving the individual about 30 days. Additionally, a COBRA election must be made not later than 6 months after the date of the TAA-related loss of coverage. COBRA coverage chosen during the second election period typically begins on the first day of that period.
More information about the Trade Act is available at dol.gov/agencies/eta/tradeact.
What options are there to decrease benefits?
Any insurer offering continuation coverage, whether the continuation is pursuant to COBRA or any available state continuation, shall offer to all beneficiaries who are eligible the option to decrease benefits. The options shall include, at a minimum, those coverage options that would have been otherwise available to employees or dependents who initially enrolled into the coverage if the options decrease coverage or an insurer may offer a standardized plan to all those eligible for continuation that contains similar benefits to the beneficiary's prior coverage but at a higher deductible or other reduced benefit features.
If a person does not elect the option to decrease benefits and continues the group plan with no change in benefits, that person does not have the right to a reduction in benefits at a later date even unless it is an open enrollment period under the group plan and there are other group options available to active employees.
When can there be early termination of continuation coverage?
A group health plan may terminate continuation coverage earlier than the end of the maximum period for any of the following reasons:
- Premiums are not paid in full on a timely basis;
- The employer ceases to maintain any group health plan;
- A qualified beneficiary begins coverage under another group health plan after electing continuation coverage;
- A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage; or
- A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage (such as fraud).
If continuation coverage is terminated early, the plan must provide the qualified beneficiary with an early termination notice. The notice must be given as soon as practicable after the decision is made, and it must describe the date coverage will terminate, the reason for termination, and any rights the qualified beneficiary may have under the plan or applicable law to elect alternative group or individual coverage.
If you decide to terminate your COBRA coverage early, you generally will not be able to get a plan on the Federally Facilitated Marketplace outside of the open enrollment period.
If I did not make the premium payment on time and my coverage was canceled, what can I do?
You may want to contact your plan and ask if they will reinstate your coverage; however, if your coverage was terminated for not making the payment within the grace period, the plan is not required to reinstate your coverage. If you believe your coverage was canceled inappropriately, you can contact an Employee Benefits Security Administration (EBSA) benefits advisor electronically at askebsa.dol.gov or call 866.444.3272 for assistance.