COBRA Continuation Coverage Eligibility Requirements

COBRA Continuation has certain eligibility requirements which must be met by the employee before the employer is obligated to continue providing health coverage. It is very important to ensure your business is following guidelines to prevent unnecessary legal trouble. If your business has a group health care plan with more than 20 employees, you are subject to the rules regarding COBRA Continuation. COBRA, also known as Consolidated Omnibus Budget Reconciliation Act was instated to ensure people have the right to maintain health insurance coverage for a variety of reasons if they would otherwise lose their existing coverage with their employer.

Coverage Requirements

The coverage must be offered to the employee and his or her family members just as before the qualifying event, except the employer is no longer obligated to pay their portion of the premium. The coverage is required for 18 months if the employee was terminated without cause and for 36 months for any other qualifying event.

Notification Requirements

There are several notification requirements, for various events. Within a 90 period after enrollment, the employee must receive a Summary Plan Description (SPD) that details all the plan information. Within this same 90 day period, participants must also receive a Notice of COBRA Rights, which explains the COBRA coverage. Within 30 days after a qualifying event occurs, the group plan must be notified that coverage is needed. Within a 14 period after receiving such notice, each beneficiary--everyone covered, not just the employee--must receive a Notice of How to Elect to Receive COBRA Benefits. The election period must be at least 60 days. Any beneficiaries who choose to deny the coverage must receive a Notice of Denial during the 14 day period. Each beneficiary affected by the same qualifying event has the right to make a different choice in regards to the COBRA coverage.


The beneficiary pays both the employee and employer portion, never exceeding 102% of what other similarly situated employees pay. The first COBRA payment must be made within 45 days after electing to receive the coverage, and all other payments fall under a 30 day grace period. The responsibility for tracking coverage election and payment days falls on the employer. As a result of the American Recovery and Reinvestment Act of 2009, any employees that were involuntarily terminated between September 1, 2008 and December 31, 2009 will only pay 35% of the required premium and the employer will pay the remaining 65%. The employer is then allowed to take this amount as a credit on their quarterly tax return.

Record Keeping Requirements

In order to remain in compliance with all COBRA laws, copies of all notification and payment records must be kept on file with the employer. It is in the best interest of the beneficiary to also keep copies of his or her records, though it is not required.

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