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COBRA Compliance

COBRA compliance

When an employee loses their insurance coverage due to termination or other specific events, when are you required to offer COBRA and which benefit plans are subject to COBRA coverage?

COBRA Fundamentals

  • COBRA stands for Consolidated Omnibus Budget Reconciliation Act
  • Employers must provide the following COBRA information to covered employees and dependents within the first 90 days of becoming a participant in the plan: general notice of COBRA rights and the plan’s Summary Plan Description (SPD) must also provide COBRA information
  • Employers must provide an election notice to employees and dependents when they lose coverage due to a qualifying event
    • Qualifying events include:
      • Reduction in hours worked
      • Termination of employment
      • Divorce
      • Legal separation
      • Child is no longer an eligible dependent
      • Employee becomes eligible for Medicare
      • Death of the covered employee
    • Coverage is offered for a temporary period of time
  • Employees and dependents are eligible to receive the same coverage they had the day before the qualifying event occurred
  • The employee usually pays for premiums – up to 102% of the cost of the plan
  • COBRA applies to public school districts, counties, municipalities, private sector organizations, and employers with 20 or more employees
  • COBRA does NOT apply to small employer group health plans (fewer than 20 employees) and churches
  • COBRA is regulated by the federal government however many states have their own COBRA rules as well


Notice Requirements

  • Employers must notify the plan administrator of a qualifying event within 30 days after any employee’s death, termination, reduced hours, or Medicare entitlement.
  • Employees/dependents must notify the plan administrator of a qualifying event within 60 days after divorce, legal separation or a child losing dependent status.
  • The plan administrator must provide election notice to employee/dependents within 14 days of receiving notification of qualifying event
  • Beneficiaries must respond to the notice and elect COBRA coverage by the 60th day after written notice has been sent or the day health care coverage ceased, whichever is later. If they do not respond by then, they will lose all rights to COBRA benefits.


What health plans are subject to COBRA?

Health plans are subject to COBRA if (1.) they provide medical care and (2.) are maintained by an employer. Medical care is defined as services related to the maintenance of health, prevention of illness, and treatment of illness or injury.1 Medical care includes coverages such as medical, dental, and vision coverage. See the chart below for additional health plans applicable to COBRA.


Type of Benefits

Subject to COBRA?

Fully-insured health insurance plans


Self-funded group health insurance plans


Dental insurance plan


Vision insurance plan


Prescription drug plan


Healthcare Flexible Spending Accounts (FSAs)

Depends upon the benefits offered2

Health Reimbursement Arrangements (HRAs)


Health Savings Accounts (HSAs)


Disease-specific policies, such as cancer policies

Yes, if it provides coverage for medical care

Employee Assistance Program (EAPs)

Depends on the EAP’s benefits – EAPs that provide medical care are likely subject to COBRA

Wellness plans

Depends on what benefits are offered3

Long-term care plans


Accidental Death & Dismemberment (AD&D) plans


Group term life insurance plans


Long-term and short-term disability plans



Download this COBRA bulletin to learn more.


1Mosby's Medical Dictionary, 8th edition. S.v. "medical care." Retrieved December 20 2017 from https://medical-dictionary.thefreedictionary.com/medical+care

2Yes, FSAs are subject to COBRA but most will qualify for a special exception

3Wellness plans that provide medical care are likely subject to COBRA

4No, as long as they don’t provide medical care

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Catie Anderson

Catie Anderson

Catie Anderson believes in the importance of service, volunteerism and community. After college, she joined AmeriCorps VISTA (Volunteers in Service to America), a national service program designed to fight poverty, where she coordinated urban after-school programs and developed learning partnerships. Joining the NIS team was an easy decision for Catie, because the core NIS values so closely match her own. Her experience in customer service has taught her to approach every day with a positive attitude and put her best effort into her work. She says, “Clients can be confident in the fact that I am working hard to make sure they have what they need and consistently receive a high level of service”. As Senior Customer Service Manager, Catie oversees the activities of the service representatives, ensures quality and timely customer service to clients and provides technical and administrative support to NIS account reps, sales reps, and regional vice presidents. Catie is a licensed insurance agent with a Group Benefits Disability Specialist (GBDS) designation.