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Never Forget the Basics – COBRA Coverage

Friday, October 18, 2019
Paul Shaheen

By: Paul V. Shaheen, Vice President / Employee Benefit Solutions

As my old hockey coach once said: never forget the basics.

After nearly a decade of health care reform, and a bucket-load of compliance even Mrs. O’Leary’s cow couldn’t kick over, it’s become increasingly challenging for HR/benefit managers to keep track of all the rules and regulations, not to mention the health care statues that existed long before health care reform was a glint in anyone’s eye. 

Moreover, when it comes to all that came before, perhaps no regulation is as critical as COBRA (i.e., the right employees have to continue their group medical coverage after they’ve lost eligibility for their group medical plan). 

Let’s have a look. First off, a pop quiz: do you know what COBRA stands for? 


COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, which requires employers of 20 or more employees (whom offer health benefits) to allow employees to continue their coverage after they’ve lost the ability to do so, due to either termination, death, divorce or reduction of hours (otherwise known as qualifying events). 

OK, that’s A LOT to take in to understand. So, let’s break it down a bit more. 

First off, when COBRA speaks of 20 employees or more, that means ALL employees, full-time and part-time. Secondly, if your group has hovered just below (or over) 20 employees for some time, you need to look at the prior calendar year and see if you averaged over, at, or above 20 total employees during that time. 

In other words, where you stood last year determines your requirement to offer COBRA this year.  Does this make sense? If so, the next question is, how long does COBRA last? 

Terminated employees, or those reduced to part-time status, can maintain coverage (at their expense) for no less than 18 months. If an employee terminates due to disability, they can keep coverage for up to 29 months; and if the loss of coverage is prompted by either death or divorce, or if a dependent ages out (turns age 26), COBRA can be continued for as long as 36 months! 

While there are many ways one can manage COBRA and its eligibility, here are the two most important things employers can’t forget: 

  1. First, by rule, employees need to be notified of their COBRA rights once they first obtain coverage. This is typically done when you hand them their employee manual and/or their open enrollment benefits guides and federal model notices. 
  2.  Secondly, whether you administer it internally or use an outside Third Party Administrator, be sure COBRA eligible employees receive their COBRA notice within 30 days of their loss of coverage. Also, if you are using a TPA to manage this function, be sure you have communicated with your TPA as to whose responsibility it is (yours or the TPA’s) to notify employees of their COBRA rights. 

There’s much more when it comes to COBRA, and we’ll touch on all of it in part II of our review. For now, remember to take your time, keep it simple, and if you’re not sure, raise your hand and ask. 

Yes, my hockey coach used to say that too! 

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.