COBRA Continuation Coverage Questions and Answers

Q1: What is COBRA continuation coverage?

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) amended the Public Health Service Act, the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) to require employers with 20 or more employees to provide temporary continuation of group health coverage in certain situations where it would otherwise be terminated.

Q2: What is public sector COBRA?

Title XXII of the Public Health Service (PHS) Act, 42 U.S.C. §§ 300bb-1 through 300bb-8, applies COBRA requirements to group health plans that are sponsored by state or local government employers.  It is sometimes referred to as “public sector” COBRA to distinguish it from the ERISA and Internal Revenue Code requirements that apply to private employers.  

Q3: Who has jurisdiction with respect to public sector COBRA?

The U.S. Department of Health and Human Services, through the Centers for Medicare & Medicaid Services (CMS) has jurisdiction with respect to the COBRA continuation coverage requirements of the PHS Act that apply to state and local government employers, including counties, municipalities and public school districts, and the group health plans that they sponsor.

Q4: What is a qualified beneficiary?

A qualified beneficiary is an individual who is entitled to COBRA continuation coverage because he or she was covered by a group health plan on the day before a “qualifying event.”  Depending on the circumstances, the following individuals may be qualified beneficiaries: a "covered employee" (a term that includes active employees, terminated employees and retirees); a covered employee's spouse and dependent children; any child born to or placed for adoption with a covered employee during the period of COBRA coverage; agents; self-employed individuals; independent contractors and their employees; directors of the employer; and, for public sector group health plans, political appointees and elected officials.

Q5: What is a qualifying event?

Qualifying events are certain events that would cause an individual to lose health coverage under a group health plan.    The type of qualifying event will determine who the qualified beneficiaries are and how long they will be entitled to COBRA coverage.

Q6: What are some examples of qualifying events?

The following are qualifying events: the death of the covered employee; a covered employee's termination of employment or reduction of the hours of employment; the covered employee becoming entitled to Medicare; divorce or legal separation  from the covered employee; or a dependent child ceasing to be a dependent under the generally applicable requirements of the plan.

Q7: How long does COBRA last?

Assuming one pays all required premiums, COBRA coverage starts on the date of the qualifying event, and the length of the period of COBRA coverage will depend on the type of qualifying event which caused the qualified beneficiary to lose group health plan coverage.

For “covered employees,” the only qualifying event is termination of employment (whether the termination is voluntary or involuntary) including by retirement, or reduction of employment hours.  In that case, COBRA lasts for eighteen months.

If the qualifying event is the death of the covered employee, divorce or legal separation of the covered employee from the covered employee’s spouse, or the covered employee becoming entitled to Medicare, COBRA for the spouse or dependent child lasts for  36 months.     

Q8: How is COBRA affected if I am disabled?

In certain circumstances, if a disabled individual  and non-disabled family members are qualified beneficiaries, they are eligible for up to an 11-month extension of COBRA continuation coverage, for a total of 29 months.  The criteria for this 11-month disability extension is a complex area of COBRA law.  We provide general information below, but if you have any questions regarding your disability and public sector COBRA, we encourage you to email us at phig@cms.hhs.gov.

In general, the COBRA qualifying event must be a termination of employment or a reduction of the covered employee’s employment hours.  Second, the covered employee must be determined under title II or title XVI of the Social Security Act to be disabled.  Third, the individual must be disabled at some time during the first 60 days of COBRA continuation coverage, regardless of whether the disability started prior to or during that period.  Fourth, while the disability must begin within the first 60 days of COBRA coverage, the determination under title II or XVI can be issued any time during the 18-month period of COBRA coverage that began with the qualifying event.  Finally, the covered employee must generally notify the plan administrator about the disability determination within 60 days after the date the disability determination is issued, but in no case later than the end of the 18-month period of continuation coverage that applies to the qualifying event.  In addition, the extended period of COBRA ends if there is a final determination under title II or XVI that the individual is no longer disabled.

Note that the group health plan is permitted to charge up to 150 percent of the applicable premium for the 11-month extension.

Q10: What notification requirements apply when there is  a qualifying event?

Separate requirements apply to the employer and the group health plan administrator.  An employer that is subject to COBRA requirements is required to notify its group health plan administrator within 30 days after an employee’s employment is terminated, or  employment hours are reduced.  Within 14 days of that notification, the plan administrator is required to notify the individual of his or her COBRA rights.  If the employer also is the plan administrator and issues COBRA notices directly, the employer has the entire 44-day period in which to issue a COBRA election notice.

Q11: When do I have an obligation to notify my plan administrator that I have had a qualifying event?  

If you become divorced or legally separated from the covered employee, or if a dependent child no longer meets the requirement to be a covered dependent (usually by reaching a specified age), the covered employee or qualified beneficiary is responsible for notifying the plan administrator of the qualifying event within 60 days after the date of the qualifying event.

Q12: What is the next step in the process once appropriate notice of a qualifying event is given to the health plan administrator?

Plan administrators that receive notice of a qualifying event must notify qualified beneficiaries of their right to elect COBRA coverage.  Qualified beneficiaries have independent election rights, and therefore they must each be notified.  If all the qualified beneficiaries reside at the same address, the plan administrators may either include separate election notices for each qualified beneficiary in a single mailing that is addressed to both the employee and spouse, or send a single notice that  clearly identifies all qualified beneficiaries covered by the notice, and explains each person's separate and independent right to elect COBRA continuation coverage.  Each qualified beneficiary then has 60 days to decide whether to elect continuation coverage.

If the plan administrator knows that there are qualified beneficiaries who do not live at the same address, and knows their addresses, separate election notices must be sent to those qualified beneficiaries.  A notice sent to the spouse is treated as a notification to all qualified dependent children residing with the spouse at the time the spouse's notification is sent by the plan administrator.  Notices must be provided in person or by first class mail.

Q13: What does a COBRA election notice include?

A notice of COBRA rights generally includes the following information:

• A written explanation of the procedures for electing COBRA,
• The date by which the election must be made,
• How to notify the plan administrator of the election,
• The date COBRA coverage will begin,
• The maximum period of continuation coverage,
• The monthly premium amount,
• The due date for the monthly payments,
• Any applicable premium amount due for a retroactive period of coverage,
• The address to which to send premium payments,
• A qualified beneficiary’s rights and obligations with respect to extensions of  COBRA coverage, and
• The bases for early termination of the period of  COBRA coverage.

Q14: How do I elect COBRA?

Qualified beneficiaries must notify the plan administer of their election according to the instructions laid out in the election notice.  Qualified beneficiaries must be given an election period of at least 60 days during which each qualified beneficiary may choose whether to elect COBRA coverage.  This period is measured from the later of the date of the qualifying event or the date the COBRA election notice is provided.  COBRA coverage is retroactive if elected and paid for by the qualified beneficiary.

Q15: Where do I send my COBRA payments?

The COBRA election notice should contain the address to which premium payments should be sent and should be provided by the employer or group health plan administrator along with the amount of the premium due and its due date.

Q16: How long do I have before I have to submit my first COBRA payment?

A group health plan cannot require payment for any period of COBRA continuation coverage earlier than 45 days after the day on which the qualified beneficiary made the initial election for continuation coverage.

Q17: Once the first payment is made, when do I have to submit payments for all future COBRA premiums?

Not including the first premium payments, all other premium payments must be made within 30 days of the due date (due date is set by the group health plan).

Q18: How is COBRA coverage computed and how much will I pay?

Usually the beneficiary is required to pay the entire cost of COBRA coverage, although a few employers choose to subsidize COBRA.  However, in the likely event that the employer chooses not to subsidize COBRA, the COBRA premium cannot exceed 100 percent of the cost of the group health 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 prior to the qualifying event, plus an additional 2 percent for administrative costs.  Please note the employer may charge up to 150 percent for an 11 month disability extension of COBRA coverage.

General note: COBRA can be a daunting and complex area of Federal law.  If you have any questions or issues regarding public sector COBRA we encourage you to email us at phig@cms.hhs.gov.