In the ever-evolving world of employee benefits, understanding your company’s legal obligations isn’t just vital for consistent compliance, but for cultivating trust and transparency with your workforce. One of the most important yet frequently misunderstood areas of employee benefits, by employees and corporations alike, is COBRA continuation coverage.
As a business owner or HR leader, you have a responsibility to ensure your employees are protected during times of transition, whether that’s due to layoffs, reduced hours, or family-related changes. Differing from other coverage such as life insurance in Nassau County, it’s in these situations where COBRA plays a significant role. Before we get ahead of ourselves, it’s important to identify what exactly COBRA continuation coverage is.
What Is COBRA Continuation Coverage?
COBRA (short for the Consolidated Omnibus Budget Reconciliation Act) is a federal law that requires employers with 20 or more employees to offer continued access to group health benefits when coverage would otherwise be lost due to a qualifying event. At its core, COBRA was designed to protect employees and their families from losing health coverage during major life transitions.
These qualifying events can include:
- Voluntary or involuntary job loss (excluding cases of gross misconduct)
- Reduction in work hours causing loss of eligibility
- Divorce or legal separation from a covered employee
- Death of the covered employee
- A dependent child aging out of coverage
It’s important to stress that COBRA is not a separate insurance plan, but rather a continuation of the same group plan your business already offers, which makes it a key piece of your employee benefits compliance strategy.
How COBRA Works for Both Employers and Employees
When a qualifying event happens, employers must notify their group health plan administrator. From there, a COBRA election notice must be sent to the affected individual within a required timeframe. Typically, this is within 14 days of the employer reporting the event. At this point, the individual has 60 days to decide whether to continue coverage. If they elect COBRA, they are responsible for paying 100% of the premium, plus up to a 2% administrative fee.
This is an important distinction for both the employee and employer, as it means the company isn’t footing the bill, but they are still responsible for facilitating the process. Although COBRA participants pay the full premium, the employer is still responsible for ensuring accurate documentation, timely notices, and coverage coordination with the insurer or plan administrator.
How Long Does COBRA Coverage Last?
Once your employee has decided, within the 60-day period, whether or not they want to continue their former coverage, the next logical question has to do with how long the coverage will last. Unlike traditional Suffolk County employee benefits, the duration can vary depending on what event occurs to trigger the potential coverage. This table details which qualifying event corresponds to each distinct coverage period:
| Qualifying Event | Maximum COBRA Coverage Period |
| Voluntary or involuntary job loss (excluding gross misconduct) | 18 months |
| Reduction in work hours | 18 months |
| Employee becomes eligible for Medicare (while covered under plan) | 36 months for dependents |
| Divorce or legal separation | 36 months |
| Death of the covered employee | 36 months |
| Dependent child loses eligibility (e.g., turns 26) | 36 months |
| Disability (determined by Social Security Administration) | Additional 11 months (for a total of 29 months) |
Finally, extensions beyond the limitations of the above may be available in certain cases, such as if a COBRA participant becomes disabled or if a second qualifying event occurs.
Why COBRA Matters for Employers
From a business standpoint, COBRA isn’t simply about keeping in congruence with the latest regulations across a given industry. It’s also about carefully maintaining brand reputation, employee satisfaction, and risk management. Offering COBRA shows employees that you’re committed to their well-being, even after they’ve left your organization, giving them the flexibility they deserve and exhibiting appreciation for their hard work. It also helps protect your company from penalties and legal action related to benefit administration.
If your business has 20 or more full-time equivalent employees, you are required by federal law to offer COBRA. Some states have their own “mini-COBRA” laws that apply to smaller employers, so it’s crucial to be fully aware and completely understand both federal and state regulations.
Finally, if you or members of your organization want to seek out more information about COBRA coverage as it relates to your business, you should consult the experts at Margolis & Associates. They take the time to break down the importance of COBRA coverage and how offering it can make a difference to your employees. If you’d like your questions answered regarding COBRA continuation coverage or other categories of coverage that may be a fit for your organization, we encourage you to get in touch today.
