The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides protection for workers and their families who lose access to group health benefits under certain circumstances. These events include situations like voluntary or involuntary job loss, reduction in hours worked, transitions between jobs, death, divorce, and other qualifying life events. COBRA gives these individuals the right to continue their health coverage for a limited time, even after they would otherwise lose it.
COBRA Requirements for Employers
- Eligibility for Continuation Coverage
Federal COBRA law applies to group health plans sponsored by employers with 20 or more employees in the prior calendar year. In qualifying situations, employees and their families must be given the opportunity to temporarily extend their health coverage through COBRA. (Several states allow employees and their families to continue on their most recent employer health plan if it were to end. The Wisconsin Continuation Statute requires businesses with 19 or fewer employees to offer workers health insurance continuation. This is often referred to as mini-COBRA.) - Premium Payment
While employees may continue their health coverage, they typically must pay the full premium for coverage, which can be up to 102% of the cost to the plan. This includes the full premium amount, plus a 2% administrative fee. - Election and Notice Requirements
COBRA also outlines the process for employees and their family members to elect continuation coverage and requires employers and health plans to notify qualified individuals of their rights. Employers must provide specific notices detailing how to elect COBRA continuation coverage and the timelines for doing so.
It is vital that employers meet their COBRA obligations to avoid penalties and ensure employees and their families are informed of their rights. Timely and accurate notifications, as well as clear communication about coverage options and premiums, are critical to staying in compliance with COBRA requirements.