AN EMPLOYER’S GUIDE TO 

GROUP HEALTH CONTINUATION

COVERAGE UNDER 

COBRA

EMPLOYEE BENEFITS SECURITY ADMINISTRATION

UNITED STATES DEPARTMENT OF LABOR
This publication has been developed by the U.S. Department of Labor, 

Employee Benefits Security Administration (EBSA).

To view this and other publications, visit the agency’s Website at dol.gov/ebsa.

To order publications, or to speak with a benefits advisor, contact EBSA 

electronically at askebsa.dol.gov.

Or call toll free: 1-866-444-3272

This material will be made available in alternative format 

to persons with disabilities upon request:

Voice phone: (202) 693-8664

TTY: (202) 501-3911

This booklet constitutes a small entity compliance guide for purposes of the 

Small Business Regulatory Enforcement Fairness Act of 1996. 
Contents 

Introduction .........................................................................................1

What is COBRA Continuation Coverage? ........................................1

Who Is Entitled to Continuation Coverage? .....................................3

COBRA Notice and Election Procedures .........................................4

Benefits Under Continuation Coverage ...........................................7

Duration of Continuation Coverage ..................................................7

Chart: Summary of Qualifying Events, 

Qualified Beneficiaries, and 

Maximum Periods of Continuation Coverage ..................................9

Paying for Continuation Coverage ..................................................10

Coordination with Other Federal Benefit Laws .............................11

Role of the Federal Government .....................................................12

Resources .........................................................................................13

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AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 1

Introduction

Health coverage is one of the most important benefits that employers can provide for their 

employees. Employers that sponsor group health plans enable their employees and their 

families to take care of their essential medical needs, ensuring that they can devote their 

energies to productive work. Because of the critical importance of good health, employersponsored group health plans benefit employees, employers, and society as a whole.

Most group health plans sponsored by employers must comply with the Employee 

Retirement Income Security Act of 1974 (ERISA), a Federal law that sets standards 

to protect employee benefits. One of the protections contained in ERISA is the right to 

COBRA continuation coverage, a temporary continuation of group health coverage that 

would otherwise be lost due to certain life events.

This guide summarizes COBRA continuation coverage and explains the rules that apply to group health 

plans. It is intended to assist employers that sponsor group health plans to comply with this important Federal law. 

What Is COBRA Continuation Coverage?

COBRA – the Consolidated Omnibus Budget Reconciliation Act – requires group health plans to offer continuation 

coverage to covered employees, former employees, spouses, former spouses, and dependent children when group health 

coverage would otherwise be lost due to certain specific events. Those events include the death of a covered employee, 

termination or reduction in the hours of a covered employee’s employment for reasons other than gross misconduct, a 

covered employee’s becoming entitled to Medicare, divorce or legal separation of a covered employee and spouse, and a 

child’s loss of dependent status (and therefore coverage) 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 what 

circumstances justify terminating continuation coverage.

Employers may require individuals to pay for COBRA continuation coverage. The premium that is charged cannot exceed 

the full cost of the coverage, plus a 2 percent administration charge.

Group Health Plans Subject to COBRA

COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 

employees on more than 50 percent of its typical business days in the previous calendar year. 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 a full-time 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.

COBRA also applies to plans sponsored by state and local governments.1 The law does not apply, however, to plans 

sponsored by the Federal Government or by churches and certain church-related organizations.

What is a group health plan? It is any arrangement that an employer establishes or maintains to provide employees or their 

families with medical care, whether it is provided through insurance, by a health maintenance organization, out of the 

employer’s assets, or through any other means. “Medical care” includes for this purpose:

Inpatient and outpatient hospital care; 

Physician care; 

Surgery and other major medical benefits; 

Prescription drugs; and

Dental and vision care. 

1The COBRA provisions of the Public Health Service Act covering state and local government plans are administered by the Department of Health and Human Services 

under the provisions of the Public Health Service Act.
2 UNITED STATES DEPARTMENT OF LABOR

Life insurance is not considered “medical care,” nor are disability benefits. COBRA does not cover plans that provide only 

life insurance or disability benefits.

Group health plans covered by COBRA that are sponsored by private-sector employers are generally welfare plans under 

ERISA and therefore subject to ERISA’s other requirements. Under ERISA, group health plans must be administered 

by a plan administrator, who is usually named in the plan documents. Many group health plans are administered by the 

employer that sponsors the plan, but group health plans are also frequently administered, in whole or in part, by another 

individual or organization separate from the employer, such as a professional benefits administration firm. Carrying out 

the requirements of COBRA is the direct responsibility of the plan administrator.

Alternatives to COBRA Continuation Coverage 

Those entitled to elect COBRA continuation coverage may have alternatives for coverage that may be more affordable 

or more generous. One option may be “special enrollment” in other group health coverage. Under the Health Insurance 

Portability and Accountability Act (HIPAA), upon certain events, group health plans and health insurance issuers are 

required to provide a special enrollment period during which individuals who previously declined coverage for themselves 

and their dependents, and who are otherwise eligible, may be allowed to enroll without having to wait until the next open 

season for enrollment. One event that triggers special enrollment is an employee or dependent of an employee losing 

eligibility for other health coverage. For example, an employee who loses group health coverage may be able to special 

enroll in a spouse’s health plan. The employee or dependent must request special enrollment within 30 days of the loss of 

other coverage.

Losing employment-based health coverage also gives the employee an opportunity to enroll in the Health Insurance 

Marketplace (Marketplace) that serves the state in which the employee resides. The Marketplace offers “one-stop 

shopping” for individuals and small businesses to find and compare private health insurance options. Through the 

Marketplace, individuals may be eligible for cost-sharing reductions and a tax credit that lowers monthly premiums. 

Being offered COBRA continuation coverage does not limit eligibility for coverage or for a tax credit through the 

Marketplace. The employee or dependent must select Marketplace coverage within 60 days before or 60 days after the 

loss of other coverage, or will have to wait until the next open enrollment period.

Through the Marketplace, individuals also can determine whether they or their dependents qualify for free or low-cost 

coverage from Medicaid or the Children’s Health Insurance Program (CHIP). Eligible individuals can apply for and enroll 

in Medicaid and CHIP at any time. For more information about the Marketplace, including information about Medicaid or 

CHIP eligibility, visit HealthCare.gov.

If an employee or dependent chooses to elect COBRA, the employee or dependent will have another opportunity to 

request special enrollment in another group health plan or the Marketplace once COBRA is exhausted. In order to 

exhaust COBRA coverage, the individual must receive the maximum period of COBRA coverage available without early 

termination. An individual must request special enrollment within 30 days of the loss of COBRA coverage for coverage 

through another group health plan or select a plan within 60 days before or 60 days after the loss of COBRA coverage, 

for coverage through a Marketplace plan. If an employee or dependent chooses to terminate COBRA coverage early 

with no special enrollment opportunity at that time, they will have to wait to enroll in other coverage until the next open 

enrollment period for another group health plan or the Marketplace.
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AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 3

Who Is Entitled to Continuation Coverage?

A group health plan is required to offer COBRA continuation coverage only to qualified beneficiaries and only after a 

qualifying event has occurred.

Qualified Beneficiaries

A qualified beneficiary is an individual who was covered by a group health plan on the day before a qualifying event 

occurred and who is an employee, the employee’s spouse or former spouse, or the employee’s dependent child. In certain 

cases involving the bankruptcy of the employer, a retired employee, the retired employee’s spouse (or former 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 a period of continuation coverage is automatically considered a qualified 

beneficiary. An employer’s agents, independent contractors, and directors who participate in the group health plan may 

also be qualified beneficiaries.

Qualifying Events

“Qualifying events” are events that cause an individual to lose group health coverage. The type of qualifying event 

determines who the qualified beneficiaries are for that event and the period of time that a plan must offer continuation 

coverage. COBRA establishes only the minimum requirements for continuation coverage. A plan may always choose to 

provide longer periods of continuation coverage and may choose to contribute toward the cost of the coverage.

The following are qualifying events for a covered employee if they cause the covered employee to lose coverage:

Termination of the covered employee’s employment for any reason other than “gross misconduct”; or 

Reduction in the covered employee’s hours of employment. 

The following are qualifying events for a spouse and dependent child of a covered employee if they cause the spouse or 

dependent child to lose coverage:

Termination of the covered employee’s employment for any reason other than “gross misconduct”; 

Reduction in hours worked by the covered employee; 

Covered employee becomes entitled to Medicare; 

Divorce or legal separation of the spouse from the covered employee; or 

Death of the covered employee. 

In addition to the above, the following is a qualifying event for a dependent child of a covered employee if it causes the 

child to lose coverage:

Loss of “dependent child” status under the plan rules. Under the Affordable Care Act, plans that offer coverage to 

children on their parents’ plan must make coverage available until the adult child reaches the age of 26.
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4 UNITED STATES DEPARTMENT OF LABOR

COBRA Notice and Election Procedures 

Under COBRA, group health plans must provide covered employees and their families with specific notices explaining 

their COBRA rights. Plans must also have rules for how COBRA continuation coverage is offered, how qualified 

beneficiaries may elect continuation coverage, and when it can be terminated.

Notice Procedures

Summary Plan Description

The COBRA rights provided under the plan, like other important plan information, must be described in the plan’s 

Summary Plan Description (SPD). The SPD is a written document that gives important information about the plan, 

including what benefits are available under the plan, the rights of participants and beneficiaries under the plan, and how 

the plan works. ERISA requires group health plans to give each participant an SPD within 90 days after he or she first 

becomes a participant in a plan (or within 120 days after the plan is first subject to the reporting and disclosure provisions 

of ERISA). In addition, if there are material changes to the plan, the plan must give participants a Summary of Material 

Modifications (SMM) not later than 210 days after the end of the plan year in which the changes become effective. If the 

change is a material reduction in covered services or benefits, the SMM must be furnished not later than 60 days after the 

reduction is adopted. A participant or beneficiary covered under the plan may request a copy of the SPD and any SMMs 

(as well as any other plan documents), which must be provided within 30 days of a written request.

COBRA General Notice

Group health plans must give each employee and each spouse of an employee who becomes covered under the plan a 

general notice describing COBRA rights. The general notice must be provided within the first 90 days of coverage. Group 

health plans can satisfy this requirement by including the general notice in the plan’s SPD and giving the SPD to the 

employee and to the spouse within this time limit.

The general notice must include:

The name of the plan and the name, address, and telephone number of someone whom the employee and spouse

can contact for more information on COBRA and the plan;

A general description of the continuation coverage provided under the plan;

An explanation of what qualified beneficiaries must do to notify the plan of qualifying events or disabilities;

An explanation of the importance of keeping the plan administrator informed of addresses of the participants and

beneficiaries; and

A statement that the general notice does not fully describe COBRA or the plan and that more complete

information is available from the plan administrator and in the SPD.

The Department of Labor has developed a model general notice that single-employer group health plans may use to satisfy 

the general notice requirement. It is available at dol.gov/ebsa. In order to use this model general notice properly, the 

plan administrator must complete it by filling in the blanks with the appropriate plan information. Use of the model general 

notice, appropriately completed, will be considered by the Department to be good faith compliance with the general notice 

content requirements of COBRA.
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AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 5

COBRA Qualifying Event Notice

Before a group health plan must offer continuation coverage, a qualifying event must occur. The group health plan must 

be notified of the qualifying event and is not required to act until it receives an appropriate notice. Who must give notice 

depends on the type of qualifying event.

The employer must notify the plan if the qualifying event is:

Termination or reduction in hours of employment of the covered employee; 

Death of the covered employee; 

Covered employee’s becoming entitled to Medicare; or

Bankruptcy of a private-sector employer. 

The employer must notify the plan within 30 days after the event occurs.

The covered employee or one of the qualified beneficiaries must notify the plan if the qualifying event is:

Divorce; 

Legal separation; or 

A child’s loss of dependent status under the plan. 

Group health plans are required to have procedures for how the covered employee or one of the qualified beneficiaries can 

provide notice of these types of qualifying events. The plan can set a time limit for providing this notice, but the time limit 

cannot be shorter than 60 days, starting from the latest of: (1) the date on which the qualifying event occurs; (2) the date on 

which the qualified beneficiary loses (or would lose) coverage under the plan as a result of the qualifying event; or (3) the 

date on which the qualified beneficiary is informed, through the furnishing of either the SPD or the COBRA general notice, 

of the responsibility to notify the plan and the procedures for doing so. The procedures must describe how, and to whom, 

notice should be given, and what information must be included in the qualifying event notice. If one person gives notice of 

a qualifying event, the notice covers all qualified beneficiaries affected by that event.

If a group health plan does not have reasonable procedures for how to provide these notices, qualified beneficiaries are 

permitted to give notice (either written or oral) to the person or unit that handles the employer’s employee benefits matters. 

If the plan is a multiemployer plan, notice can also be given to the joint board of trustees; and if the plan is administered by 

an insurance company (or the benefits are provided through insurance), notice can be given to the insurance company.

COBRA Election Notice 

After receiving a notice of a qualifying event, the plan must provide the qualified beneficiaries with an election notice, 

which describes their rights to continuation coverage and how to make an election. The election notice must be provided to 

the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event

The election notice should include:

The name of the plan and the name, address, and telephone number of the plan’s COBRA administrator; 

Identification of the qualifying event; 

Identification of the qualified beneficiaries (by name or by status); 

An explanation of the qualified beneficiaries’ right to elect continuation coverage; 

The date coverage will terminate (or has terminated) if continuation coverage is not elected; 

How to elect continuation coverage; 

What will happen if continuation coverage isn’t elected or is waived; 
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6 UNITED STATES DEPARTMENT OF LABOR

What continuation coverage is available, for how long, and (if it is for less than 36 months), how it can be 

extended for disability or second qualifying events; 

How continuation coverage might terminate early; 

Premium payment requirements, including due dates and grace periods; 

A statement of the importance of keeping the plan administrator informed of the addresses of qualified 

beneficiaries; and 

A statement that the election notice does not fully describe COBRA or the plan and that more information is 

available from the plan administrator and in the SPD. 

The Department has developed a model election notice that plans may use to satisfy their obligation to provide the election 

notice. The model election notice is available at dol.gov/ebsa. In order to use this model election notice properly, the 

plan administrator must complete it by filling in the blanks with the appropriate plan information. The Department will 

consider use of the model election notice, appropriately completed, good faith compliance with the election notice content 

requirements of COBRA.

COBRA Notice of Unavailability of Continuation Coverage

Group health plans may sometimes deny a request for continuation coverage or for an extension of continuation coverage, 

when the plan determines the requester is not entitled to receive it. When a group health plan makes the decision to deny 

a request for continuation coverage or a request for an extension from an individual, the plan must give the individual a 

notice of unavailability of continuation coverage. The notice must be provided within 14 days after the request is received, 

and the notice must explain the reason for denying the request.

COBRA Notice of Early Termination of Continuation Coverage

Continuation coverage must generally be made available for a maximum period (18, 29, or 36 months). The group health plan 

may terminate continuation coverage early, however, for any of a number of specific reasons. (See “Duration of Continuation 

Coverage” later in this booklet.) When a group health plan decides to terminate continuation coverage early for any of these 

reasons, the plan must give the qualified beneficiary a notice of early termination. The notice must be given as soon as practicable 

after the decision is made, and it must describe the date coverage will terminate, the reason for termination, and any rights the 

qualified beneficiary may have under the plan or applicable law to elect alternative group or individual coverage.

Special Rules for Multiemployer Plans

Multiemployer plans are allowed to adopt some special rules for COBRA notices. First, a multiemployer plan may adopt 

its own uniform time limits for the qualifying event notice or the election notice. A multiemployer plan also may choose 

not to require employers to provide qualifying event notices, and instead to have the plan administrator determine when a 

qualifying event has occurred. Any special multiemployer plan rules must be set out in the plan’s documents (and SPD).

Election Procedures

COBRA requires group health plans to give qualified beneficiaries an election period during which they can decide 

whether to elect continuation coverage, and COBRA also gives qualified beneficiaries specific election rights.

At a minimum, each qualified beneficiary must be given at least 60 days to choose whether or not to elect COBRA

coverage, beginning from the later of the date the election notice is provided, or the date on which the qualified beneficiary 

would otherwise lose coverage under the group health plan due to the qualifying event.

Each qualified beneficiary must be given an independent right to elect continuation coverage. This means that when several 
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 7

individuals (such as an employee, his or her spouse, and their dependent children) become qualified beneficiaries due to the 

same qualifying event, each individual can make a different choice. The plan must allow the covered employee or the covered 

employee’s spouse, however, to elect continuation coverage on behalf of all of the other qualified beneficiaries for the same 

qualifying event. A parent or legal guardian of a qualified beneficiary must also be allowed to elect on behalf of a minor child.

If a qualified beneficiary waives continuation coverage during the election period, he or she must be permitted to later 

revoke the waiver of coverage and elect continuation coverage, as long as the revocation is done before the end of the 

election period. If a waiver is later revoked, however, the plan is permitted to make continuation coverage begin on the 

date the waiver was revoked.

Benefits under Continuation Coverage

COBRA also sets standards for the continuation coverage that must be provided.

The continuation coverage must be identical to the coverage that is currently available under the plan to similarly situated 

individuals who are covered under the plan and not receiving continuation coverage. (Generally, this is the same coverage 

that the qualified beneficiary had immediately before the qualifying event.) A qualified beneficiary receiving continuation 

coverage must receive the same benefits, choices, and services that a similarly situated participant or beneficiary is 

currently receiving under the plan, such as the right during an open enrollment season to choose among available coverage 

options. The qualified beneficiary is also subject to the same plan rules and limits that would apply to a similarly situated 

participant or beneficiary, such as co-payment requirements, deductibles, and coverage limits. The plan’s rules for filing 

benefit claims and appealing any claims denials also apply.

Any changes made to the plan’s terms that apply to similarly situated active employees and their families will also apply 

to qualified beneficiaries receiving COBRA continuation coverage. If a child is born to or adopted by a covered employee 

during a period of continuation coverage, the child is automatically considered to be a qualified beneficiary receiving 

continuation coverage. The plan must allow the child to be added to the continuation coverage.

Duration of Continuation Coverage

Maximum Periods 

COBRA requires that continuation coverage extend from the date of the qualifying event for a limited period of time of 

18 or 36 months. The length of time for which continuation coverage must be made available (the “maximum period” of 

continuation coverage) depends on the type of qualifying event that gave rise to the COBRA rights. A plan, however, may 

provide longer periods of coverage beyond the maximum period required by law.

When the qualifying event is the covered employee’s termination of employment (for reasons other than gross misconduct) 

or reduction in hours of work, qualified beneficiaries must be provided 18 months of continuation coverage.

When the qualifying event is the end of employment or reduction of the employee’s hours, and the employee became entitled 

to Medicare less than 18 months before the qualifying event, COBRA coverage for the employee’s spouse and dependents can 

last until 36 months after the date the employee becomes entitled to Medicare. For example, if a covered employee becomes 

entitled to Medicare 8 months before the date his/her employment ends (termination of employment is the COBRA qualifying 

event), COBRA coverage for his/her spouse and children would last 28 months (36 months minus 8 months).

For all other qualifying events, qualified beneficiaries must be provided 36 months of continuation coverage.2

2   Under COBRA, certain retirees and their family members who receive post-retirement health coverage from employers have special COBRA rights in the event that the 

employer is involved in bankruptcy proceedings begun on or after July 1, 1986. This booklet does not fully describe the COBRA rights of that group.
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8 UNITED STATES DEPARTMENT OF LABOR

Early Termination

A group health plan may terminate continuation coverage earlier than the end of the maximum period for any of the 

following reasons:

Premiums are not paid in full on a timely basis; 

The employer ceases to maintain any group health plan; 

A qualified beneficiary begins coverage under another group health plan after electing continuation coverage; 

A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage; or

A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly 

situated participant or beneficiary not receiving continuation coverage (such as fraud). 

If continuation coverage is terminated early, the plan must provide the qualified beneficiary with an early termination notice. 

(See COBRA Notice and Election Procedures earlier in this booklet.)

Extension of an 18-month Period of Continuation Coverage

There are two circumstances under which individuals entitled to an 18-month maximum period of continuation coverage 

can become entitled to an extension of that maximum. The first is when one of the qualified beneficiaries is disabled; the 

second is when a second qualifying event occurs.

Disability

If one of the qualified beneficiaries in a family is disabled and meets certain requirements, all of the qualified beneficiaries 

in that family are entitled to an 11-month extension of the maximum period of continuation coverage (for a total maximum 

period of 29 months of continuation coverage). The plan can charge qualified beneficiaries an increased premium, up to 150 

percent of the cost of coverage, during the 11-month disability extension.

The requirements are, first, that the Social Security Administration (SSA) determines that the disabled qualified beneficiary 

is disabled before the 60th day of continuation coverage and, second, that the disability continues during the rest of the 

initial 18-month period of continuation coverage.

The disabled qualified beneficiary (or another person on his or her behalf) also must notify the plan of the SSA

determination. The plan can set a time limit for providing this notice of disability, but the time limit cannot be shorter than 

60 days, starting from the latest of: (1) the date on which SSA issues the disability determination; (2) the date on which the 

qualifying event occurs; (3) the date on which the qualified beneficiary loses (or would lose) coverage under the plan as a 

result of the qualifying event; or (4) the date on which the qualified beneficiary is informed, through the furnishing of either 

the SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.

The right to the disability extension may be terminated if SSA determines that the qualified beneficiary is no longer 

disabled. The plan can require disabled qualified beneficiaries to provide notice when such a determination is made. The 

plan must give the qualified beneficiaries at least 30 days after the SSA determination in which to provide such notice.

The rules for how to give a disability notice and a notice of no longer being disabled should be described in the plan’s SPD 

(and in the election notice for any offer of an 18-month period of continuation coverage).
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 9

Second Qualifying Event

An 18-month extension may be available to qualified beneficiaries receiving an 18-month maximum period of continuation 

coverage (giving a total maximum period of 36 months of continuation coverage) if the qualified beneficiaries experience 

a second qualifying event that is death of the covered employee, divorce or legal separation of the covered employee and 

spouse, Medicare entitlement (in certain circumstances), or loss of dependent child status under the plan. The second event 

can be a second qualifying event only if it would have caused the qualified beneficiary to lose coverage under the plan in 

the absence of the first qualifying event.

The plan must have procedures for how a qualified beneficiary should provide notice of a second qualifying event. These 

rules should be described in the plan’s SPD (and in the election notice for any offer of an 18-month period of continuation 

coverage). The plan can set a time limit for providing this notice, but the time limit cannot be shorter than 60 days from 

the latest of: (1) the date on which the qualifying event occurs; (2) the date on which the qualified beneficiary loses (or 

would lose) coverage under the plan as a result of the qualifying event; or (3) the date on which the qualified beneficiary 

is informed, through the furnishing of either the SPD or the COBRA general notice, of the responsibility to notify the plan 

and the procedures for doing so.

Summary of Qualifying Events, Qualified Beneficiaries, and 

Maximum Periods of Continuation Coverage

The following chart shows the maximum period for which continuation coverage must be offered for the specific qualifying 

events and the qualified beneficiaries who are entitled to elect continuation coverage when the specific event occurs. Note 

that an event is a qualifying event only if it causes the qualified beneficiary to lose coverage under the plan.

QUALIFYING EVENT QUALIFIED 

BENEFICIARIES 

MAXIMUM PERIOD OF

CONTINUATION 

COVERAGE 

Termination (for reasons other than gross 

misconduct) or reduction in hours of employment

Employee

Spouse

Dependent Child

18 months3

Employee enrollment in Medicare Spouse

Dependent Child

36 months4

Divorce or legal separation Spouse

Dependent Child

36 months

Death of employee Spouse

Dependent Child

36 months

Loss of “dependent child” status under the plan Dependent Child 36 months

3

 In certain circumstances, qualified beneficiaries entitled to 18 months of continuation coverage may become entitled to a disability extension of an additional 11 

months (for a total maximum of 29 months) or an extension of an additional 18 months due to the occurrence of a second qualifying event (for a total maximum 

of 36 months). (See Duration of Continuation Coverage earlier in this booklet.) 4

 The actual period of continuation coverage may vary depending on factors such as whether the Medicare entitlement occurred prior to or after the end of the 

covered employee’s employment or reduction in hours. For more information, see Duration of Continuation Coverage earlier in this booklet or contact 

the Department of Labor’s Employee Benefits Security Administration (EBSA) electronically at askebsa.dol.gov or by calling 1-866-444-3272.
10 UNITED STATES DEPARTMENT OF LABOR

Paying for Continuation Coverage 

Group health plans can require qualified beneficiaries to pay for COBRA continuation coverage, although plans can choose 

to provide continuation coverage at reduced or no cost. The maximum amount charged to qualified beneficiaries cannot 

exceed 102 percent of the cost to the plan for similarly situated individuals covered under the plan who have not incurred a 

qualifying event. In calculating premiums for continuation coverage, a plan can include the costs paid by both the employee 

and the employer, plus an additional 2 percent for administrative costs. For qualified beneficiaries receiving the 11-month 

disability extension of continuation coverage, the premium for those additional months may be increased to 150 percent of 

the plan’s total cost of coverage.

COBRA charges to qualified beneficiaries may be increased if the cost to the plan increases but generally must be fixed in 

advance of each 12-month premium cycle. The plan must allow qualified beneficiaries to pay the required premiums on a 

monthly basis if they ask to do so, and may allow payments at other intervals (for example, weekly or quarterly). All of the 

necessary information about COBRA premiums, when they are due, and the consequences of payment and nonpayment 

should be described in the COBRA election notice.

Qualified beneficiaries cannot be required to pay a premium at the time they make the COBRA election. Plans must provide 

at least 45 days after the election (that is, the date the qualified beneficiary mails the election form if using first-class mail) 

for making an initial premium payment. If a qualified beneficiary fails to make any payment before the end of the initial 

45-day period, the plan can terminate the qualified beneficiary’s COBRA rights. The plan should establish due dates for any 

premiums for subsequent periods of coverage, but it must provide a minimum 30-day grace period for each payment.

Plans are permitted to terminate continuation coverage if full payment is not received before the end of a grace period. If the 

amount of a payment made to the plan is incorrect, but is not significantly less than the amount due, the plan must notify the 

qualified beneficiary 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, but is required to provide a notice of early 

termination if continuation coverage is terminated early due to failure to make a timely payment.

Health Coverage Tax Credit

Certain individuals may be eligible for a Federal income tax credit that can help with qualified monthly premium payments. 

The Health Coverage Tax Credit (HCTC), while available, is a refundable tax credit to pay for specified types of health 

insurance coverage (including COBRA continuation coverage). 

Those potentially eligible for the HCTC include workers who lose their jobs due to the negative effects of global trade 

and who are eligible to receive certain benefits under the Trade Adjustment Assistance (TAA) Program, as well as certain 

individuals who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC). The HCTC pays 

72.5 percent of qualified health insurance premiums, with individuals paying 27.5 percent. For more information on TAA, 

visit doleta.gov/tradeact/.

Individuals who are eligible for the HCTC may claim the tax credit on their income tax returns at the end of the year. 

Qualified family members of eligible 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. 

Individuals with questions about the Health Coverage Tax Credit should visit IRS.gov/HCTC. 
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AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 11

Coordination with Other Federal Benefit Laws

The Family and Medical Leave Act (FMLA) 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. Group health coverage that is provided under the FMLA during a family or medical leave is not COBRA 

continuation coverage, and taking 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 

taking FMLA leave decides not to return to work and notifies an employer of his or her intent not to return to work.

The Affordable Care Act (ACA) provides additional protections for coverage under an employment-based group health 

plan, including COBRA continuation coverage. These protections include:

Extending dependent child coverage to age 26;

Prohibiting limits or exclusions from coverage for preexisting conditions;

Banning lifetime or annual dollar limits on coverage for essential health benefits; and

Requiring group health plans and insurers to provide an easy-to-understand summary of a health plan’s benefits 

and coverage.

Some plan sponsors may have chosen to make only routine changes and generally keep the coverage under their health 

plan the same as it was on March 23, 2010. These grandfathered health plans are required to comply with some of the 

ACA protections (including those noted above), but not all. Additional protections that may apply to non-grandfathered 

health plans include coverage for:

Certain preventive services (such as blood pressure, diabetes and cholesterol tests, regular well-baby and wellchild visits, routine vaccinations and many cancer screenings) without cost sharing; and

Emergency services in an emergency department of a hospital outside your plan’s network without prior 

approval from your health plan.

For more information regarding whether your plan is a grandfathered health plan and the requirements under the ACA, 

visit the Employee Benefits Security Administration’s ACA Web page at dol.gov/ebsa/healthreform.

Certain Trade Adjustment Assistance (TAA) Program participants have a second opportunity to elect COBRA continuation 

coverage. Individuals who are eligible and receive Trade Readjustment Allowances (TRA), individuals who would be 

eligible to receive TRA, but have not yet exhausted their unemployment insurance (UI) benefits, and individuals receiving 

benefits under Alternative Trade Adjustment Assistance (ATAA) or Reemployment Trade Adjustment Assistance (RTAA), 

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 eligible 

for the TAA benefits listed above and receives such benefit. For example, if an individual’s general election period runs 

out and he or she is determined eligible for TRA (or would be eligible for TRA but have not exhausted UI benefits) or 

begin to receive ATAA or RTAA benefits 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 does not meet the 

eligibility criteria 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, 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 doleta.gov/tradeact/. 
12 UNITED STATES DEPARTMENT OF LABOR

Role of the Federal Government

COBRA continuation coverage laws are administered by several agencies. The Departments of Labor and the Treasury 

have jurisdiction over private-sector group health plans. The Department of Health and Human Services administers the 

continuation coverage law as it applies to state and local government health plans.

The Labor Department’s interpretive responsibility for COBRA is limited to the disclosure and notification requirements 

of COBRA. The Labor Department has issued regulations on the COBRA notice provisions. The Treasury Department has 

interpretive responsibility to define the required continuation coverage. The Internal Revenue Service, Department of the 

Treasury, has issued regulations on COBRA provisions relating to eligibility, coverage, and payment. The Departments of 

Labor and the Treasury share jurisdiction for enforcement of these provisions.
AN EMPLOYER’S GUIDE TO GROUP HEALTH CONTINUATION COVERAGE UNDER COBRA 13

Resources

If you need further information about COBRA, ACA, HIPAA, or ERISA, visit the Employee Benefits Security Administration’s 

(EBSA) Website at dol.gov/ebsa/compliance_assistance.html. Or you may contact EBSA electronically at 

askebsa.dol.gov or call toll free 1-866-444-3272.

The Centers for Medicare and Medicaid Services offer 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

Federal employees are covered by a Federal law similar to COBRA. Those employees should contact the personnel office 

serving their agency for more information on temporary extensions of health benefits.

For more information on the ACA, visit HealthCare.gov.

Further information on FMLA is available on the Website of the U.S. Department of Labor’s Wage and Hour Division at 

dol.gov/whd or by calling toll-free 1-866-487-9243. 

For information on the Trade Adjustment Assistance (TAA) Program, visit doleta.gov/tradeact/. For information 

about the Health Coverage Tax Credit (HCTC), visit IRS.gov/HCTC. 

EMPLOYEE BENEFITS SECURITY ADMINISTRATION

UNITED STATES DEPARTMENT OF LABOR

September 2015