COBRA Overview

The Consolidated Omnibus Budget Reconciliation Act of (“COBRA”) gives workers who lose health coverage due to a qualifying event the opportunity to elect continued coverage from their group health plan for a limited time. COBRA requires an employer to notify an eligible employee twice: once when the employee begins participating in a group health plan and once when the employee notifies the employer that a qualifying event has occurred.

COBRA Benefits

Generally, employees who elect COBRA continuation are entitled to continue receiving group health care coverage for a period ending 18 months after the qualifying event if the qualifying event is termination or a reduction in the hours of employment. COBRA qualifying events include loss of health insurance coverage due to termination of employment, reduced hours, death of an employee and other events such as divorce.

Who is Covered by COBRA?

A qualified beneficiary is any individual who, on the day before a qualifying event, is covered under a group health plan maintained by the employer of a covered employee by virtue of being any of the following individuals:

  • A covered employee
  • A spouse of the covered employee
  • Dependent child of the covered employee
  • A child who is born to, or placed for adoption with, a covered employee during a period of continuation coverage

Employer Obligations Under COBRA

Not all employers are covered by COBRA. Employers with 20 or more employees are usually required to offer COBRA coverage and to notify their employees and other qualified beneficiaries of the availability of such coverage within 44 days of a qualifying event.

Penalties for COBRA Violations

Employers who fail to comply with the COBRA requirements can be required to pay a steep price. Failure to provide the COBRA election notice within this time period can subject employers to a penalty of up to $110 per day, as well as the cost of medical expenses incurred by the qualified beneficiary. If an employer fails to provide the required notice and a lawsuit results, the employer can also be required to pay the attorney’s fees of the former employee’s lawyer and other damages.

If you have been unlawfully denied COBRA benefits, let us know. We can help.