COBRA Continuation Coverage Overview

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows individuals to continue their group health plan coverage in certain situations. Specifically, COBRA requires group health plans to offer continuation coverage to covered employees and dependents when coverage would otherwise be lost due to certain specific events.

These events include the death of a covered employee, termination or a reduction in the hours of a covered employee’s employment, divorce of a covered employee and spouse, and a child’s loss of dependent status under the plan.

COBRA sets rules for how and when continuation coverage must be offered and provided, how employees and their families may elect continuation coverage and when continuation coverage may be terminated.

Employers may require individuals to pay for COBRA coverage. Group health coverage for COBRA participants is usually more expensive than coverage for active employees, since many employers pay a part of the premium for active employees.

When Does COBRA Apply

Most private-sector employers that maintain group health plans for their employees must comply with COBRA’s continuation coverage requirements. This includes, for example, corporations, partnerships and tax-exempt organizations.  However, COBRA does not apply to group health plans maintained by small employers. A “small employer” under COBRA means an employer that had fewer than 20 employees on on more than 50 percent of its typical business days in the previous calendar year.

Impact of State Continuation Coverage – Many states have laws similar to COBRA that apply to fully insured group health plans, including plans maintained by churches and employers with fewer than 20 employees. These are sometimes called mini-COBRA laws. Even if a plan is not subject to COBRA, it may still be required to provide continuation coverage under state insurance laws.

Pennsylvania Act 2 of 2009, or PA Mini-COBRA, requires small businesses (with 2-19 employees), who offer medical coverage to their employees, spouses and/or dependent children, to provide continuation coverage to a member who loses medical coverage because of certain qualifying events.  Under PA mini-COBRA, the maximum period of eligibility is 9 months from the start of continuation coverage and requires that the employee be covered under the group health plan for 3 consecutive months prior to the qualifying event.

COBRA also applies to plans sponsored by state and local governments. It does not apply, however, to plans sponsored by the federal Government or by churches and certain church-related organizations.

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For more information on offering COBRA for your business contact your Power Kunkle Client Manager or our Compliance Department for more information.


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The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.