COBRA Insurance

How Does COBRA Insurance Work?

Depending on the QLE, employers must provide eligible individuals with a COBRA notice outlining the right to elect coverage, typically within 14 to 44 days.

From there, individuals have a 60-day COBRA election period to decide whether to enroll in the continued coverage. If elected, COBRA benefits are retroactive to the date coverage would have otherwise ended, ensuring no gap in care.

While the plan’s benefits remain the same, the enrolled individual now pays the full monthly insurance premium (instead of splitting it with the employer), plus a 2% administrative fee.

COBRA Health Plan Eligibility Requirements

To qualify for COBRA coverage, individuals must meet three criteria:

• Employer Eligibility: The employer must offer a group health insurance plan and have at least 20 employees on more than 50% of its business days in the previous calendar year.
• Plan Participation: The individual or employee must have been enrolled in the employer's group health plan on the day before the qualifying event.
• Qualifying Event: A COBRA qualifying event must occur that would otherwise result in the loss of coverage (e.g., voluntary or involuntary job loss (except for gross misconduct), reduction in work hours, divorce or legal separation, etc.).

What Does COBRA Insurance Cover?

COBRA insurance coverage maintains the same level of health benefits the individual or dependent had under the employer-sponsored plan, ensuring consistency in care during transitional periods. This includes access to the same doctors, copays, deductibles, prescription benefits, and specialty care.

How Long Can COBRA Last?

The length of a COBRA coverage period depends on the type of qualifying event:

COBRA Insurance Rules for Employers

Federal COBRA guidelines for employers outline various employer responsibilities related to continued coverage, communication, documentation, and other relevant matters.

COBRA Notice Requirements

Meeting COBRA notification requirements is a vital part of helping eligible individuals make informed decisions about their health insurance coverage. Employers and plan administrators must issue:

• General Notice: Provided to employees and their spouses within 90 days of enrolling in the group health plan, outlining basic COBRA health insurance rights.
• Qualifying Event Notice: Sent within 30 days of the event, notifying the plan administrator that a COBRA-triggering event occurred.
• COBRA Election Notice: Delivered within 14 days of the qualifying event notice, detailing how to enroll in COBRA continuation coverage, premium costs, deadlines, and the COBRA election period.
• Notice of Early Termination: Sent if COBRA health coverage ends before the maximum coverage period.
• Notice of Unavailability of Continuation Coverage: If a request for COBRA coverage or an extension is denied, the plan must provide this notice within 14 days, clearly explaining the reason for the denial.

COBRA Requirements for Continued Coverage

Under COBRA, qualified beneficiaries must receive the same health coverage that was in place immediately before the qualifying event, including coverage limits, copayment levels, deductibles, and access to the same provider network.

COBRA enrollees must also be offered the same rights as active employees, including participation in open enrollment periods and eligibility for any new or modified plan options. If, for example, the group health plan changes for similarly situated active employees, those changes must also apply equally to individuals receiving COBRA continuation coverage.

Additionally, if a child is born to or adopted by a covered employee during COBRA coverage, that child is automatically considered a qualified beneficiary and must be added to the plan upon request.

COBRA Plan Documentation Requirements

Employers and plan administrators must provide timely and accurate documentation throughout the COBRA enrollment and coverage periods.

For instance, the plan’s summary plan description (SPD) must explain COBRA rights, outline procedures for giving notice of qualifying events, and describe how to elect COBRA continuation coverage. Moreover, any material changes to the plan must be recorded and shared through a summary of material modifications (SMM).

If a participant or beneficiary submits a written request for these documents, the plan administrator must respond within 30 days.

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Related Glossary Terms

• Cafeteria Plan
• Summary Plan Description (SPD)
• Open Enrollment