What Is COBRA Continuation Coverage?
The Consolidated Omnibus Budget Reconciliation Act, or COBRA, provides employees and their dependents the right to temporarily keep their group health benefit currently in effect after a qualifying event that would normally cause loss of benefits. Businesses with 20 or more employees offering group health plans will be subject to this federal law
COBRA continuing coverage helps to protect individuals' health benefit rights through transitional job changes or changes in family composition, thereby avoiding loss of access to safe and effective medical care during periods of transition.
Qualifying Events for COBRA
COBRA continuation coverage can be triggered by events such as:
- Voluntary or involuntary job loss
- Reduction in work hours
- Divorce or legal separation from a covered employee
- Death of the covered employee
- Loss of dependent eligibility under a health plan
These events allow the employee and their eligible dependents to elect to continue the same group health insurance they had while employed.
How COBRA Coverage Works
Under COBRA:
- Eligible individuals must pay the full health insurance premium plus a 2% administrative fee.
- Coverage usually mirrors the employee’s existing plan, including the same doctors, providers, and benefits.
- The maximum coverage period is generally 18 months, although it can extend up to 36 months in certain cases, such as secondary qualifying events.
COBRA coverage is designed as a temporary bridge between employer-provided insurance and new coverage, whether through a new employer, marketplace plan, or other insurance.
How to Enroll in COBRA
Employees or their dependents must follow these steps to enroll:
- Notify the employer within 60 days of the qualifying event.
- The employer has 14 days to send a COBRA election notice, explaining coverage options, premiums, and deadlines.
- Recipients have 60 days from the election notice to decide whether to enroll.
- Once enrolled, monthly premiums plus a 2% administrative fee are due to maintain coverage.
Missing the enrollment deadline can result in losing the right to continue coverage.
Benefits of COBRA Continuation Coverage
- Maintains uninterrupted health insurance for employees and their families
- Allows continuity with the same providers and health plan network
- Provides financial protection during transitions, reducing risk of medical debt
COBRA ensures temporary security for health coverage, giving employees time to transition to other insurance options without losing essential benefits.