The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires most employers to provide former employees and dependents who lose group health benefits due to a “qualifying event” with an opportunity to continue group health coverage for a limited period of time.
Qualifying Events
COBRA coverage must be offered when:
- A qualifying event occurs when the health plan is subject to COBRA; and
- The qualifying event causes a loss of coverage under the plan for a covered employee, covered spouse or covered dependent child (referred to as “qualified beneficiaries”).
Not all losses of health plan coverage are caused by qualifying events. If an employee or dependent loses group health plan coverage for a reason that is not a COBRA-qualifying event, the employer is not required to offer COBRA coverage. Likewise, if the event does not cause a loss of group health coverage, the employer is not required to offer COBRA coverage.
Maximum Coverage Period
The period of COBRA coverage offered to qualifying beneficiaries is known as the “maximum coverage period.” The length of the maximum coverage period depends on the type of qualifying event that has occurred. It is:
- 18 months for termination of employment or reduction in hours; and
- 36 months for all other qualifying events.
There are situations where the maximum coverage period can be extended (due to disability or a second qualifying event) or terminated early (for example, when COBRA premiums are not paid).
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