COBRA
COBRA allows employees and dependents to continue group health coverage after employment ends or other qualifying events, typically for 18-36 months.
us-specific
Category
intermediate
Difficulty
6 min read
Read time
2025-01-15
Updated
Definition
Short definition
COBRA allows employees and dependents to continue group health coverage after employment ends or other qualifying events, typically for 18-36 months.
Detailed explanation
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and families who lose health benefits the right to continue group health coverage for limited periods.
COBRA applies to employers with 20 or more employees. Qualifying events include job loss, reduction in hours, divorce, and other life events that would cause loss of coverage.
The individual generally pays the full premium (employer plus employee share) plus a 2% administrative fee. Coverage must be identical to that provided to current employees.
Practical guidance
How it works
After qualifying event, employer sends COBRA notice within 14 days. Individual has 60 days to elect. Coverage is retroactive to loss of coverage date.
Best practices
Use COBRA administration service or software
Send notices immediately upon qualifying event
Track premium payments carefully
Document all communications
Provide clear election forms
Legal context
Legal basis
Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. §1161 et seq.)
Jurisdiction: US Federal
Key provisions
Employers with 20+ employees must offer COBRA
18 months for job loss or hour reduction
36 months for divorce, death, Medicare eligibility
Same coverage as active employees
102% of premium cost to participant
60 days to elect coverage
Official source
Frequently asked questions
How much does COBRA cost?
COBRA costs up to 102% of the full premium (employer and employee portions combined). This is often 3-4 times what the employee paid as an active employee since employers typically subsidize most of the cost.
How long does COBRA coverage last?
18 months for termination or hour reduction. 36 months for divorce, dependent child losing eligibility, or employees Medicare eligibility. Disability can extend coverage to 29 months.