What Employers should know about COBRA

COBRA is a federal law that requires employers with 20 or more employees to offer continuing coverage to individuals who would otherwise lose their health benefits due to termination of employment, reduction in hours or certain other events. Individual states may also have COBRA-like laws that apply.

If you are subject to COBRA, and if you have a group health plan, you have to provide COBRA benefits to qualified beneficiaries. A qualified beneficiary is anyone covered under your group health plan on the day before an event that causes loss of coverage. Beneficiaries include employees, including part time employees if they participate in your plan on the day before the qualifying event, their spouses, their dependents, retirees (unless they are eligible for Medicare) and partners in a partnership.

The following types of plans generally need to be offered to employees when COBRA is triggered:

  • health care plans
  • dental plans
  • vision plans
  • hearing plans
  • prescription drug plans

Under federal law, life insurance, disability insurance, and retirement plans are not plans that you must extend to people entitled to COBRA coverage. Although state laws may require some or all of these plans to receive COBRA like benefits.

For example, Minnesota has a COBRA-like law that requires group life insurance be extended to qualifying COBRA individuals.