COBRA
A federal law requiring employers with 20+ employees to offer continuation of group health insurance coverage to employees who lose coverage due to qualifying events.
COBRA (Consolidated Omnibus Budget Reconciliation Act, 1985) is a federal law requiring employers with 20 or more employees who sponsor group health plans to offer temporary continuation of health coverage to employees and their dependents when coverage would otherwise be lost due to qualifying events.
Qualifying events that trigger COBRA rights include: voluntary or involuntary termination of employment (except gross misconduct), reduction in work hours, divorce or legal separation from the covered employee, the employee becoming entitled to Medicare, a dependent child losing dependent status under the plan, and the covered employee's death.
Duration of COBRA coverage depends on the triggering event: 18 months for termination or hours reduction (extendable to 36 months with a second qualifying event or disability determination), and 36 months for other qualifying events (divorce, death, loss of dependent status).
The key drawback of COBRA is cost. The individual typically pays up to 102% of the full group premium (employer + employee share + 2% administrative fee). For family coverage costing $22,000/year, this could mean paying $1,870/month — which is why many people decline COBRA in favor of marketplace plans, spouse coverage, or short-term insurance.
Employers are responsible for providing COBRA election notices within specific timeframes (the plan administrator must notify qualified beneficiaries within 14 days of the qualifying event) and for administering the program, either directly or through a COBRA administrator. Many payroll and benefits platforms offer COBRA administration as an add-on service.
FAQs
How long do employees have to elect COBRA coverage?
Qualified beneficiaries have 60 days from the date of the COBRA election notice (or the date coverage is lost, whichever is later) to elect COBRA continuation coverage. Coverage is retroactive to the date it would have ended, so there's no gap even if election is made on day 59.
Are part-time employees eligible for COBRA?
COBRA applies to any employee covered under the group health plan, regardless of full-time or part-time status. If a part-time employee was enrolled in the employer's group health plan, they are entitled to COBRA continuation upon a qualifying event, for the same duration as full-time employees.
What is mini-COBRA?
Many states have enacted 'mini-COBRA' laws that extend similar continuation coverage rights to employees of smaller employers (typically 2–19 employees) who are not covered by federal COBRA. Mini-COBRA requirements vary by state in terms of duration, qualifying events, and notice requirements.
Related Terms
Benefits Administration
The management of employee benefits programs including health insurance, retirement plans, PTO, and other compensation components.
W-2 Employee
A traditional full-time or part-time employee whose taxes are withheld by the employer, documented annually on IRS Form W-2.
Payroll Tax
Taxes levied on wages and salaries, split between employee withholding and employer contributions, funding social programs like Social Security and Medicare.
