CITIES: Brightwood, Camp
Cascade Locks, Cascadia, Chemult,
Chiloquin, Crescent, Crescent Lake, Detroit, Diamond Lake, Drew,
Estacada, Fort Klamath, Gates, Gilchrist, Government Camp, Idanha,
Klamath Agency, La Pine, Lakeview, McKenzie Bridge, Mill City, North
Umpqua, Oakridge, Prospect, Rhododendron, Sandy,
Sunriver, Warm Springs,
Welches, Westfir, Zigzag
AREAS: Crater Lake National Park, Deshutes National Forest,
Fremont National Forest, Mount Hood National Forest, Rogue River
National Forest, The Three Sisters, Umpqua National Forest, Willamette
National Forest, Winema National Forest
Bend, Brothers, Condon, Culver, Dufur,
Fossil, Grass Valley, Hampton, Lonerock,
Madras, Maupin, Metolius, Mitchell, Moro,
Mosier, Paulina, Post, Prineville,
Rufus, Shaniko, Spray,
The Dalles, Wasco
CITIES: Adams, Arlington,
Baker City, Boardman, Canyon City, Condon,
Cove, Dayville, Echo, Elgin,
Enterprise, Fossil, Greenhorn, Haines, Halfway,
Heppner, Hermiston, Huntington, Imbler, Imnaha, Irrigon, Island City, John Day,
La Grande, Lexington, Long Creek, Lostine,
Medical Springs, Milton-Freewater, Monument, Mt Vernon, North Powder, Oxbow,
Pendleton, Pilot Rock, Prairie City,
Richland, Seneca, Summerville, Sumpter, Ukiah, Umatilla, Union, Unity,
Astoria, Bay City, Beaver,
Manzanita, Neahkahnie, Oceanside,
Lincoln City, Mapleton,
Newport, Otter Rock, Reedsport, Seal Rock,
Coos Bay, Coquille,
Port Orford, Powers, Wedderburn
Portland and VicinityBanks, Barlow,
Beaverton, Camas, Canby,
Clackamas, Clatskanie, Columbia City,
Forest Grove, Gaston,
Gresham, Happy Valley,
Lake Oswego, Marquam,
Milwaukie, Molalla, North Plains,
Portland, Rainier, Sandy, Scappoose, St.
Tualatin, Vernonia, West Linn,
Adel, Adrian, Burns, Diamond, Drewsey,
Frenchglen, Hines, Jordan Valley, Juntura, Lakeview, Nyssa,
Ontario, Plush, Vale
Ashland, Butte Falls, Cave Junction,
Canyonville, Central Point, Dillard, Drain, Eagle Point, Elkton, Glendale,
Glide, Gold Hill,
Grants Pass, Jacksonville, Klamath Falls, Malin,
Merlin, Myrtle Creek, Oakland, Phoenix,
Prospect, Riddle, Rouge River, Roseburg, Shady Cove, Sutherlin, Talent,
Umpqua, White City, Winchester, Winston, Wolf Creek, Yoncalla
AREAS: Applegate Valley, Illinois Valley
Albany, Alsea, Amity, Aumsville,
Brownsville, Canby, Canyonville, Carlton,
Corvallis, Coburg, Cottage Grove, Creswell,
Culp Creek, Dallas, Dayton, Detroit, Donald,
Eugene, Falls City, Gates, Gervais, Halsey,
Harrisburg, Independence, Jefferson, Junction City, Keizer, Lebanon, Lowell,
McMinnville, Mill City, Millersburg, Mt.Angel,
Molalla, Monmouth, Newberg, Oakridge, Oregon City, Philomath,
Salem, Scio, Scott Mills, Sheridan,
Silverton, Sodaville, Springfield, Stayton, St. Paul, Sublimity, Sweet Home,
Tangerit, Turner, Veneta, Walterville, Waterloo, Willamina, Woodburn, Yamhill
COBRA Continuation Health Coverage
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Q1: What is COBRA continuation health coverage?
Congress passed the landmark Consolidated Omnibus Budget
Reconciliation Act (COBRA) health benefit provisions in 1986. The law
amends the Employee Retirement Income Security Act, the Internal
Revenue Code and the Public Health Service Act to provide continuation
of group health coverage that otherwise might be terminated.
Q2: What does COBRA do?
COBRA provides certain former employees, retirees, spouses, former
spouses, and dependent children the right to temporary continuation of
health coverage at group rates. This coverage, however, is only
available when coverage is lost due to certain specific events. Group
health coverage for COBRA participants is usually more expensive than
health coverage for active employees, since usually the employer pays
a part of the premium for active employees while COBRA participants
generally pay the entire premium themselves. It is ordinarily less
expensive, though, than individual health coverage.
Q3: Who is entitled to benefits under COBRA?
There are three elements to qualifying for COBRA benefits. COBRA
establishes specific criteria for plans, qualified beneficiaries, and
Plan Coverage - Group health plans for employers
with 20 or more employees on more than 50 percent of its typical
business days in the previous calendar year are subject to COBRA. Both
full and part-time employees are counted to determine whether a plan
is subject to COBRA. Each part-time employee counts as a fraction of
an employee, with the fraction equal to the number of hours that the
part-time employee worked divided by the hours an employee must work
to be considered full time.
Qualified Beneficiaries - A qualified beneficiary
generally is an individual covered by a group health plan on the day
before a qualifying event who is either an employee, the employee's
spouse, or an employee's dependent child. In certain cases, a retired
employee, the retired employee's spouse, and the retired employee's
dependent children may be qualified beneficiaries. In addition, any
child born to or placed for adoption with a covered employee during
the period of COBRA coverage is considered a qualified beneficiary.
Agents, independent contractors, and directors who participate in the
group health plan may also be qualified beneficiaries.
Qualifying Events - Qualifying events are certain
events that would cause an individual to lose health coverage. The
type of qualifying event will determine who the qualified
beneficiaries are and the amount of time that a plan must offer the
health coverage to them under COBRA. A plan, at its discretion, may
provide longer periods of continuation coverage.
Qualifying Events for Employees:
- Voluntary or involuntary termination of employment for reasons
other than gross misconduct
- Reduction in the number of hours of employment
Qualifying Events for Spouses:
- Voluntary or involuntary termination of the covered employee's
employment for any reason other than gross misconduct
- Reduction in the hours worked by the covered employee
- Covered employee's becoming entitled to Medicare
- Divorce or legal separation of the covered employee
- Death of the covered employee
Qualifying Events for Dependent Children:
- Loss of dependent child status under the plan rules
- Voluntary or involuntary termination of the covered employee's
employment for any reason other than gross misconduct
- Reduction in the hours worked by the covered employee
- Covered employee's becoming entitled to Medicare
- Divorce or legal separation of the covered employee
- Death of the covered employee
Q4: How does a person become eligible for COBRA continuation
To be eligible for COBRA coverage, you must have been enrolled in
your employer's health plan when you worked and the health plan must
continue to be in effect for active employees. COBRA continuation
coverage is available upon the occurrence of a qualifying event that
would, except for the COBRA continuation coverage, cause an individual
to lose his or her health care coverage.
Q5: What group health plans are subject to COBRA?
The law generally covers health plans maintained by private-sector
employers with 20 or more employees, employee organizations, or state
or local governments.
Q6: What process must individuals follow to elect COBRA
Employers must notify plan administrators of a qualifying event
within 30 days after an employee's death, termination, reduced hours
of employment or entitlement to Medicare.
A qualified beneficiary must notify the plan administrator of a
qualifying event within 60 days after divorce or legal separation or a
child's ceasing to be covered as a dependent under plan rules.
Plan participants and beneficiaries generally must be sent an
election notice not later than 14 days after the plan administrator
receives notice that a qualifying event has occurred. The individual
then has 60 days to decide whether to elect COBRA continuation
coverage. The person has 45 days after electing coverage to pay the
Q7: How long after a qualifying event do I have to elect COBRA
Qualified beneficiaries must be given an election period during
which each qualified beneficiary may choose whether to elect COBRA
coverage. Each qualified beneficiary may independently elect COBRA
coverage. A covered employee or the covered employee's spouse may
elect COBRA coverage on behalf of all other qualified beneficiaries. A
parent or legal guardian may elect on behalf of a minor child.
Qualified beneficiaries must be given at least 60 days for the
election. This period is measured from the later of the coverage loss
date or the date the COBRA election notice is provided by the employer
or plan administrator. The election notice must be provided in person
or by first class mail within 14 days after the plan administrator
receives notice that a qualifying event has occurred.
The Trade Adjustment Assistance Act of 2002 amended COBRA to
provide certain trade affected workers with a second opportunity to
elect COBRA continuation coverage. Individuals who are eligible for
trade adjustment assistance (TAA) or alternative trade adjustment
assistance (ATAA) and who did not elect COBRA during the general
election period may get a second election period. This additional,
second election period is measured 60 days from the first day of the
month in which an individual is determined TAA-eligible. For example,
if an individual's general election period runs out and he or she is
determined TAA-eligible 61 days after separating from employment, at
the beginning of the month, he or she would have approximately 60 more
days to elect COBRA. However, if this same individual is not
determined TAA-eligible until the end of the month, the 60 days are
still measured from the first of the month, in effect giving the
individual about 30 days. Additionally, the Trade Act of 2002 added
another limit on the second election period. A COBRA election must be
made not later than 6 months after the date of the TAA-related loss of
coverage. COBRA coverage chosen during the second election period
typically begins on the first day of that period. More information
about the Trade Act is available at
Q8: How do I file a COBRA claim for benefits?
Health plan rules must explain how to obtain benefits and must
include written procedures for processing claims. Claims procedures
must be described in the Summary Plan Description.
You should submit a claim for benefits in accordance with the
plan's rules for filing claims. If the claim is denied, you must be
given notice of the denial in writing generally within 90 days after
the claim is filed. The notice should state the reasons for the
denial, any additional information needed to support the claim, and
procedures for appealing the denial.
You will have at least 60 days to appeal a denial and you must
receive a decision on the appeal generally within 60 days after that.
Contact the plan administrator for more information on filing a
claim for benefits. Complete plan rules are available from employers
or benefits offices. There can be charges up to 25 cents a page for
copies of plan rules.
Q9: Can individuals qualify for longer periods of COBRA
Yes, disability can extend the 18 month period of continuation
coverage for a qualifying event that is a termination of employment or
reduction of hours. To qualify for additional months of COBRA
continuation coverage, the qualified beneficiary must:
- Have a ruling from the Social Security Administration that he or
she became disabled within the first 60 days of COBRA continuation
- Send the plan a copy of the Social Security ruling letter within
60 days of receipt, but prior to expiration of the 18-month period
If these requirements are met, the entire family qualifies for an
additional 11 months of COBRA continuation coverage. Plans can charge
150% of the premium cost for the extended period of coverage.
Q10: Is a divorced spouse entitled to COBRA coverage from their
former spouses’ group health plan?
Under COBRA, participants, covered spouses and dependent children
may continue their plan coverage for a limited time when they would
otherwise lose coverage due to a particular event, such as divorce (or
legal separation). A covered employee’s spouse who would lose coverage
due to a divorce may elect continuation coverage under the plan for a
maximum of 36 months. A qualified beneficiary must notify the plan
administrator of a qualifying event within 60 days after divorce or
legal separation. After being notified of a divorce, the plan
administrator must give notice, generally within 14 days, to the
qualified beneficiary of the right to elect COBRA continuation
Divorced spouses may call their plan administrator or the EBSA
Toll-Free number, 1-866-444-3272 if they have questions about COBRA
continuation coverage or their rights under ERISA.
Q11: If I waive COBRA coverage during the election period, can I
still get coverage at a later date?
If a qualified beneficiary waives COBRA coverage during the
election period, he or she may revoke the waiver of coverage before
the end of the election period. A beneficiary may then elect COBRA
coverage. Then, the plan need only provide continuation coverage
beginning on the date the waiver is revoked.
Q12: Under COBRA, what benefits must be covered?
Qualified beneficiaries must be offered coverage identical to that
available to similarly situated beneficiaries who are not receiving
COBRA coverage under the plan (generally, the same coverage that the
qualified beneficiary had immediately before qualifying for
continuation coverage). A change in the benefits under the plan for
the active employees will also apply to qualified beneficiaries.
Qualified beneficiaries must be allowed to make the same choices given
to non-COBRA beneficiaries under the plan, such as during periods of
open enrollment by the plan.
Q13: When does COBRA coverage begin?
COBRA coverage begins on the date that health care coverage would
otherwise have been lost by reason of a qualifying event.
Q14: How long does COBRA coverage last?
COBRA establishes required periods of coverage for continuation
health benefits. A plan, however, may provide longer periods of
coverage beyond those required by COBRA. COBRA beneficiaries generally
are eligible for group coverage during a maximum of 18 months for
qualifying events due to employment termination or reduction of hours
of work. Certain qualifying events, or a second qualifying event
during the initial period of coverage, may permit a beneficiary to
receive a maximum of 36 months of coverage.
Coverage begins on the date that coverage would otherwise have been
lost by reason of a qualifying event and will end at the end of the
maximum period. It may end earlier if:
- Premiums are not paid on a timely basis
- The employer ceases to maintain any group health plan
- After the COBRA election, coverage is obtained with another
employer group health plan that does not contain any exclusion or
limitation with respect to any pre-existing condition of such
beneficiary. However, if other group health coverage is obtained
prior to the COBRA election, COBRA coverage may not be discontinued,
even if the other coverage continues after the COBRA election.
- After the COBRA election, a beneficiary becomes entitled to
Medicare benefits. However, if Medicare is obtained prior to COBRA
election, COBRA coverage may not be discontinued, even if the other
coverage continues after the COBRA election.
Although COBRA specifies certain periods of time that continued
health coverage must be offered to qualified beneficiaries, COBRA does
not prohibit plans from offering continuation health coverage that
goes beyond the COBRA periods.
Some plans allow participants and beneficiaries to convert group
health coverage to an individual policy. If this option is generally
available from the plan, a qualified beneficiary who pays for COBRA
coverage must be given the option of converting to an individual
policy at the end of the COBRA continuation coverage period. The
option must be given to enroll in a conversion health plan within 180
days before COBRA coverage ends. The premium for a conversion policy
may be more expensive than the premium of a group plan, and the
conversion policy may provide a lower level of coverage. The
conversion option, however, is not available if the beneficiary ends
COBRA coverage before reaching the end of the maximum period of COBRA
Q15: Who pays for COBRA coverage?
Beneficiaries may be required to pay for COBRA coverage. The
premium cannot exceed 102 percent of the cost to the plan for
similarly situated individuals who have not incurred a qualifying
event, including both the portion paid by employees and any portion
paid by the employer before the qualifying event, plus 2 percent for
For qualified beneficiaries receiving the 11 month disability
extension of coverage, the premium for those additional months may be
increased to 150 percent of the plan's total cost of coverage.
COBRA premiums may be increased if the costs to the plan increase
but generally must be fixed in advance of each 12-month premium cycle.
The plan must allow you to pay premiums on a monthly basis if you ask
to do so, and the plan may allow you to make payments at other
intervals (weekly or quarterly).
The initial premium payment must be made within 45 days after the
date of the COBRA election by the qualified beneficiary. Payment
generally must cover the period of coverage from the date of COBRA
election retroactive to the date of the loss of coverage due to the
qualifying event. Premiums for successive periods of coverage are due
on the date stated in the plan with a minimum 30-day grace period for
payments. Payment is considered to be made on the date it is sent to
If premiums are not paid by the first day of the period of
coverage, the plan has the option to cancel coverage until payment is
received and then reinstate coverage retroactively to the beginning of
the period of coverage.
If the amount of the payment made to the plan is made in error but
is not significantly less than the amount due, the plan is required to
notify you of the deficiency and grant a reasonable period (for this
purpose, 30 days is considered reasonable) to pay the difference. The
plan is not obligated to send monthly premium notices.
COBRA beneficiaries remain subject to the rules of the plan and
therefore must satisfy all costs related to co-payments and
deductibles, and are subject to catastrophic and other benefit limits.
Q16: If I elect COBRA, how much do I pay?
When you were an active employee, your employer may have paid all
or part of your group health premiums. Under COBRA, as a former
employee no longer receiving benefits, you will usually pay the entire
premium amount, that is, the portion of the premium that you paid as
an active employee and the amount of the contribution made by your
employer. In addition, there may be a 2 percent administrative fee.
While COBRA rates may seem high, you will be paying group premium
rates, which are usually lower than individual rates.
Since it is likely that there will be a lapse of a month or more
between the date of layoff and the time you make the COBRA election
decision, you may have to pay health premiums retroactively-from the
time of separation from the company. The first premium, for instance,
will cover the entire time since your last day of employment with your
You should also be aware that it is your responsibility to pay for
COBRA coverage even if you do not receive a monthly statement.
Although they are not required to do so, some employers may
subsidize COBRA coverage.
Q17: I’ve heard that the COBRA Premium Reduction (Subsidy) ends on
August 31, 2011, is this true?
Not necessarily, some individuals will still be eligible to receive
the subsidy beyond August 31, 2011. The American Recovery and
Reinvestment Act (ARRA) provided a COBRA premium reduction for
eligible individuals who were involuntarily terminated from employment
through the end of May 2010. Due to the statutory sunset, the COBRA
premium reduction under ARRA is not available for individuals who
experience involuntary terminations after May 31, 2010. However,
individuals who qualified on or before May 31, 2010 may continue to
pay reduced premiums for up to 15 months, as long as they are not
eligible for another group health plan or Medicare even if their COBRA
coverage did not start until a later date due to the terms of a
severance arrangement, or the use of banked hours or other similar
provision that delayed the start of their COBRA coverage. For example
if an individual was involuntarily terminated on May 31, 2010 and due
to the terms of a severance agreement their COBRA coverage did not
start until December 1, 2010, they would still be eligible for the
full 15 months of subsidy through February 29, 2012 as long as they
are not eligible for another group health plan or Medicare.
Q18: If I did not make the premium payment on time and my coverage
was canceled what can I do?
You may want to contact your plan and ask if they will reinstate
your coverage; however, if your coverage was terminated for not making
the payment within the grace period, the plan is not required to
reinstate your coverage. If you believe your coverage was canceled
inappropriately, please contact an EBSA Benefits Advisor at
1.866.444.3272 for assistance.
If you have lost coverage, and are not eligible to enroll in a new
employer's plan or a spouse's plan, you may want to contact your state
department of insurance to get information about obtaining an
individual policy. You may be able to cover your children under your
state's Children's Health Insurance Program- call 1.877.KIDS.NOW
(1.877.543.7669) or go to
www.insurekidsnow.gov to find out about eligibility and
Additionally, the Affordable Care Act provides that plans or
issuers that make available coverage to dependent children must make
such coverage available for children up to age 26. Because this
provision has a varying applicability date, contact the plan to see if
such coverage is available. The Affordable Care Act also established
Pre-existing Condition Insurance Plans (PCIP) for those with
pre-existing conditions. For information about how these plans work,
go to www.healthcare.gov.
If you have limited income and resources (assets), you may want to
contact your state to determine if you are eligible for Medicaid or
other programs that may assist you in obtaining assistance with health
Q19: Can I receive COBRA benefits while on FMLA leave?
The Family and Medical Leave Act, effective August 5, 1993,
requires an employer to maintain coverage under any group health plan
for an employee on FMLA leave under the same conditions coverage would
have been provided if the employee had continued working. Coverage
provided under the FMLA is not COBRA coverage, and FMLA leave is not a
qualifying event under COBRA. A COBRA qualifying event may occur,
however, when an employer's obligation to maintain health benefits
under FMLA ceases, such as when an employee notifies an employer of
his or her intent not to return to work.
Further information on FMLA is available from the nearest office of
the Wage and Hour Division, listed in most telephone directories under
U.S. Government, U.S. Department of Labor.
Q20: What changes did the Trade Act of 2002 and the Trade
Adjustment Assistance Extension Act of 2011 make with regard to COBRA
The Trade Act of 2002 created a tax credit for certain individuals
who become eligible for trade adjustment assistance and for certain
retired employees who are receiving pension payments from the Pension
Benefit Guaranty Corporation (PBGC). Under the tax provisions,
eligible individuals can either take a tax credit or get advance
payment of 65% of premiums paid for qualified health insurance,
including continuation coverage.
The Trade Adjustment Assistance Extension Act of 2011 increased the
percentage of the Health Coverage Tax Credit (HCTC), extended
eligibility for qualifying family members, and extended COBRA
coverage. These changes are effective through January 1, 2014.
In January 2012, the Monthly HCTC began paying 72.5% of qualified
health insurance premiums and individuals began paying 27.5%.
COBRA coverage can be extended through the former employer's plan
for TAA recipients and PBGC payees whose COBRA end date is on or after
November 21, 2011. TAA recipients are eligible for COBRA coverage
extensions for as long as they have TAA eligibility or until January
1, 2014. PBGC payees are eligible for COBRA coverage extensions until
January 1, 2014. If the payee passes away, their spouse or dependents
can receive an additional 24 months of COBRA or until January 1, 2014.
The law also extends the HCTC to qualified family members of TAA
recipients or PBGC payees who enroll in Medicare, pass away, or
finalize a divorce, are eligible to receive the HCTC for up to 24
months from the month of the event, or until January 1, 2014. The
extension does apply for the 2011 tax year, therefore payments made
directly to the qualified health plan for your qualified family
member's coverage can be claimed.
Health plans available through Voluntary Employee Beneficiary
Associations (VEBAs) established as a result of a former employer's
bankruptcy remain qualified for the HCTC.
For questions about eligibility for the Health Coverage Tax Credit,
call the HCTC Customer Contact Center at 1-866-628-HCTC (TDD/TTY:
1-866-626-HCTC (4282)). You may also visit the HCTC website online at
Q21: What is the Federal Government's role in COBRA?
COBRA continuation coverage laws are administered by several
agencies. The Departments of Labor and Treasury have jurisdiction over
private-sector group health plans. The Department of Health and Human
Services administers the continuation coverage law as it affects
public-sector health plans.
The Labor Department's interpretive and regulatory responsibility
is limited to the disclosure and notification requirements of COBRA.
If you need further information on your disclosure or notification
rights under a private-sector plan, or about ERISA generally,
telephone EBSA's Toll-Free number at: 1.866.444.3272.
The Internal Revenue Service, Department of the Treasury, has
issued regulations on COBRA provisions relating to eligibility,
coverage and premiums in 26 CFR Part 54, Continuation Coverage
Requirements Applicable to Group Health Plans. Both the Departments of
Labor and Treasury share jurisdiction for enforcement of these
The Center for Medicare and Medicaid Services offers information
about COBRA provisions for public-sector employees. You can write them
at this address:
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Mail Stop C1-22-06
Baltimore, MD 21244-1850
Tel 1.877.267.2323 x61565
Q22: I am a federal employee. Can I receive benefits under COBRA?
Federal employees are covered by a law similar to COBRA. Those
employees should contact the personnel office serving their agency for
more information on temporary extensions of health benefits.
Q23: Am I eligible for COBRA if my company closed or went bankrupt
and there is no health plan?
If there is no longer a health plan, there is no COBRA coverage
available. If, however, there is another plan offered by the company,
you may be covered under that plan. Union members who are covered by a
collective bargaining agreement that provides for a medical plan also
may be entitled to continued coverage.
Q24: How do I find out about COBRA coverage and how do I elect to
Employers or health plan administrators must provide an initial
general notice if you are entitled to COBRA benefits. You probably
received the initial notice about COBRA coverage when you were hired.
When you are no longer eligible for health coverage, your employer
has to provide you with a specific notice regarding your rights to
COBRA continuation benefits.
Employers must notify their plan administrators within 30 days
after an employee's termination or after a reduction in hours that
causes an employee to lose health benefits.
The plan administrator must provide notice to individual employees
of their right to elect COBRA coverage within 14 days after the
administrator has received notice from the employer.
You must respond to this notice and elect COBRA coverage by the
60th day after the written notice is sent or the day health care
coverage ceased, whichever is later. Otherwise, you will lose all
rights to COBRA benefits.
Spouses and dependent children covered under your health plan have
an independent right to elect COBRA coverage upon your termination or
reduction in hours. If, for instance, you have a family member with an
illness at the time you are laid off, that person alone can elect
The U.S. Department of Labor's program for the review of denials of
the COBRA premium reduction under the American Recovery and
Reinvestment Act (ARRA) has ended. The COBRA premium reduction was
available for individuals who experienced involuntary terminations on
or before May 31, 2010. The COBRA premium reduction under ARRA is not
available for individuals who experience involuntary terminations
after May 31, 2010; therefore the eligibility period for the subsidy
has passed. For anyone with extenuating circumstances who believes
they may be eligible for the premium reduction, contact the
Department's Employee Benefits Security Administration at
www.askebsa.dol.gov or by calling 1-866-444-3272.
For more information on COBRA Continuation Coverage, see the
Posters and Flyers
Subscribe to this page for
notification of updates as guidance and educational information and
tools are added. You can also contact EBSA by calling toll free
1-866-444-EBSA (3272) for more information.
COBRA Health Insurance Continuation Premium
The Recovery Act established an employer-provided health insurance
continuation subsidy for workers who involuntarily lost their jobs
between Sept. 1, 2008, and March 31, 2010.
This subsidy has now been extended through May
The U.S. Department of Labor website also contains extensive
information on this subsidy.
Health Coverage Tax Credit
Some people who are eligible for the COBRA subsidy also qualify for
the health coverage tax credit (HCTC) and may want to choose this more
generous benefit instead. The HCTC pays 80 percent of health insurance
premiums for those who qualify. Eligible individuals must receive
Trade Adjustment Assistance benefits or be between the ages of 55 and
65 and receive pension payments from the Pension Benefit Guaranty
Corporation. Individuals must also be enrolled in a qualified health
plan. Find additional information at HCTC:
Eligibility Requirements and How to Receive the HCTC.
See these resources:
IRS Releases Information to Help Employers Claim COBRA Medical
Coverage Credit on Payroll Tax Form.
Questions and answers
on how to administer the COBRA continuation premium subsidy to
Premium Assistance for COBRA Benefits.
Employers should use the updated:
Employer's Quarterly Federal Tax Return, to report their COBRA
premium assistance payments.
Form 941 Instructions,
which explain how to complete lines 12a and 12b, which address the
COBRA premium assistance payments.
Small employers that file
Form 944, Employer’s ANNUAL Federal
Tax Return — generally those with an estimated employment tax
liability of $1,000 or less in the calendar year — may claim their
COBRA credit on Form 944. Additionally, agricultural employers may
claim the COBRA credit on
Form 943, Employer’s Annual Federal
Tax Return for Agricultural Employees.
Employees and Former Employees
If You Lost Your Job
The Recovery Act provides eligible workers who have lost their
jobs with a 65 percent subsidy for COBRA continuation premiums for
themselves and their families for up to 15 months.
- Eligible workers pay
35 percent of the premium to their former employers.
- To qualify you must have been
involuntarily separated from your job between Sept. 1, 2008, and May
- This subsidy is
reduced if your filing status is single and your modified adjusted
gross income exceeds $125,000 ($250,000 if you file a joint
return). If your modified adjusted gross income exceeds $145,000
($290,000 for joint filers), you do not qualify for the subsidy.
If Your Hours Were Reduced
In addition, the COBRA subsidy is available to people
who become eligible for COBRA coverage as a result of a reduction in
hours occurring between Sept. 1, 2008, and May 31, 2010, followed by
an involuntary termination between March 2, 2010 and May 31, 2010. If
you fall into this category, your subsidy is available starting with
the first period of coverage beginning after the involuntary
Individuals who did not take COBRA coverage after the reduction in
hours or who signed up but later dropped it, get another
chance to sign up for COBRA coverage. In this case, the COBRA coverage
would begin with the first period of coverage after the involuntary
termination and continue up to 18 months after the reduction in hours.
The administrator of a group health plan or other entity must provide
notice of the new election right after the involuntary termination. As
in the case of other assistance-eligible individuals, the subsidy ends
after the earliest of 15 months, the end of COBRA coverage, or
eligibility for other group health or Medicare coverage.
Questions and Answers
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question and answer page.
Related Item: The
American Recovery and Reinvestment Act of 2009: Information Center
Continuation of Coverage (COBRA)
What is COBRA?
Since 1986, the Consolidated Omnibus Budget Reconciliation Act
(COBRA) permits employees - and sometimes their dependents - to
remain on an employer's group health plan even after their
Who qualifies for COBRA?
To qualify for COBRA continuation coverage, an employee must meet
- They must work for an employer with 20 or more employees. (See
here for information about smaller businesses).
- They must be covered under the employer's group health plan as
an employee or as the spouse or dependent child of an employee.
- They must have a qualifying event that would cause them to
lose their group health coverage.
COBRA qualifying events for
- Loss of job, regardless of whether the worker quit or was laid
off. COBRA does not apply to workers who are fired for "gross
- A reduction hours worked that makes the employee ineligible
for health benefits
COBRA qualifying events for
- Loss of coverage by the employee because of one of the
qualifying events above
- Covered employee becomes eligible for Medicare
- Divorce or legal separation from the covered employee
- Death of the covered employee
COBRA qualifying events for
- Loss of coverage because of any of the above qualifying events
- No longer considered a dependent child under the health plan's
rules (although the Affordable Care Act requires plans that cover
dependents to cover them to age 26)
Employees, spouses and dependents who were covered under the
group health plan before the loss of coverage are eligible for
COBRA. Each person has an independent right to elect COBRA coverage,
so that spouses and dependents can elect COBRA coverage on their
What does COBRA cover?
The health plan under COBRA remains the same as the coverage from
the employer. For example, if an employee had coverage for medical
care, hospitalization, dental, vision, and prescription drug
benefits before joining COBRA, they can continue coverage for these
benefits under COBRA. If these benefits were covered by more than
one plan (for example, a separate health insurance and dental
insurance plan) a person can choose to continue coverage under any
or all of the plans. However, if an employer changes the health
benefits package for active employees, the COBRA coverage will also
change to remain identical to that available to employees.
How long does COBRA coverage last?
COBRA coverage generally lasts up to 18 months and cannot be
renewed. However, certain dependents are eligible for up to 36
months of COBRA continuation coverage following these qualifying
- Employee becomes eligible for Medicare
- Death of employee
- Divorce or separation of employee
- No longer considered a dependent
Special rules also apply to people with disabilities. For these
individuals, COBRA may extend the typical 18-month coverage to a
total of 29 months.
Usually, COBRA continuation coverage ends when a person joins a
new health plan. However, if the new plan has a waiting period or a
pre-existing condition exclusion period, a person can keep COBRA
coverage during that period. COBRA coverage also ends if the
employer stops offering health insurance to employees.
What does COBRA coverage cost?
COBRA gives individuals a right to maintain their
employer-sponsored coverage, but many individuals find the cost to
be unaffordable. That's because a person choosing COBRA coverage
must pay the entire
premium (including the employer and employee share), plus a 2
percent administrative fee, for a total of 102 percent of the
premium for the health plan. Individuals who qualify for the 11
month special disability extension can be charged premiums up to 150
percent of the rate active employees pay. The first premium must be
paid within 45 days of choosing COBRA coverage.
Is there a COBRA subsidy?
Because COBRA premiums can be too expensive for people who've
lost their jobs, Congress enacted a COBRA subsidy for certain
laid-off workers as part of the 2009 stimulus legislation. The
American Recovery and Reinvestment Act (ARRA)
provided a time-limited COBRA premium reduction for workers who were
laid off from work prior to June 1, 2010 (therefore not available to
workers laid off after May 31, 2010).
People who qualified on or before May 31, 2010 may continue to get
the premium subsidy for up to 15 months, as long as they are not
eligible for another group health plan or Medicare. If an
individual's COBRA coverage lasts for more than the 15 months, they
must then start paying the full premium to continue coverage. The
subsidy may be applied to state mini-COBRA laws, if it meets certain
How do people learn about their COBRA rights?
Employees must be notified of their COBRA rights when they enroll
in the group health plan, and again if they qualify for COBRA
coverage. The federal law includes deadlines for employers,
employees and insurers to meet when COBRA is triggered by a
qualifying event, and employees and their families must pay
attention to these deadlines or risk losing their right to enroll in
COBRA. For example, if the event that makes a person eligible for
COBRA coverage involves death, termination, reduction in hours
worked, or Medicare eligibility, the employer has 30 days to notify
the health insurer of this change in circumstances. However, if the
qualifying event involves divorce, legal separation or loss of
dependent status, an employee has 60 days to notify the insurer.
Once the insurer has been notified of the qualifying event, it has
14 days to send a notice to the policyholder about how to elect
COBRA coverage. Each member of a family eligible for COBRA coverage
then has 60 days to make this decision. Once a person chooses COBRA
coverage, the insurance coverage will begin retroactive to the date
of the qualifying event, and premiums must be paid dating back to
What about people who work for small employers?
Because COBRA rules only apply to businesses with 20 or more
employees, often people who work for small businesses have
difficulty keeping insurance when they make job transitions. To
address this issue,
40 states have enacted continuation coverage laws that are
similar to COBRA, known as mini-COBRAs, that apply to small
businesses. These state laws require employers with fewer than 20
employees to make COBRA continuation coverage available. However,
the coverage may be for a shorter time, with fewer benefits and with
higher administrative fees.
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