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What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a law that allows participants to remain on an employer’s group coverage if they would otherwise lose coverage for certain reasons (for example, job loss, death, divorce or no longer satisfying the plan’s eligibility criteria for dependent children). Employers who employed 20 or more employees on more than 50 percent of the business days in the prior calendar year are subject to COBRA. Small employers that are not subject to COBRA may be subject to state law continuation coverage provisions with respect to their fully-insured medical plans.

The coverage offered under COBRA must be identical to the coverage for active employees. COBRA participants may be required to pay the full cost of coverage, plus a two percent administrative fee. COBRA requires specific notices to be provided to employees and dependents when certain event occur. The initial COBRA notices must be provided to covered employees and spouses when coverage begins or within 90 days of enrollment. For more information on the required COBRA notices, see the document “Summary of Notice and Disclosure Rules for Group Health Plans ” in the User Downloads section below.