COBRA (Consolidated Omnibus Budget Reconciliation Act) provides employees and their dependents with the option to continue their health benefits after experiencing a qualifying event, such as a job loss or a reduction in work hours. This continuation coverage ensures individuals do not experience a sudden lapse in their health insurance. To comply with COBRA regulations, an employer must meet the COBRA minimum employees requirement, meaning the business has 20 or more employees on more than 50% of its typical business days in the previous calendar year.
This includes both full-time and part-time employees, with part-time employees counted as a fraction of a full-time employee based on their hours worked. Employers that meet the COBRA minimum employees threshold must offer COBRA coverage to eligible employees and their covered dependents.
COBRA coverage and Medicare
Employees who become eligible for Medicare may have questions about how COBRA interacts with their healthcare coverage. Understanding the relationship between COBRA and Medicare is critical to avoiding coverage gaps and penalties.
- If an individual is already enrolled in COBRA and later becomes eligible for Medicare, COBRA coverage may end early, depending on the plan’s rules. However, dependents may still be eligible to continue COBRA coverage.
- If an individual is eligible for Medicare before electing COBRA, they can still choose COBRA for any dependents who were covered under their employer-sponsored health plan.
- It’s important to be mindful of Medicare Part B enrollment deadlines. Delaying enrollment while covered under COBRA may result in late enrollment penalties and a gap in healthcare coverage.
COBRA minimum employees requirement for compliance
The COBRA minimum employees rule ensures that businesses with 20 or more employees provide continuation coverage to eligible employees and their families. However, some states have enacted mini-COBRA laws that extend similar continuation coverage requirements to smaller businesses. These state-specific regulations may allow employees of smaller employers to maintain their health insurance coverage after a qualifying event.
Key considerations for employers and employees include:
- Mini-COBRA laws vary by state, so eligibility and coverage duration may differ.
- Some states require employers with fewer than the COBRA minimum employees to offer a continuation of group health benefits for a limited period.
- Employees should check with their state’s insurance department or their employer’s benefits administrator to determine whether they qualify for continuation coverage under state law.
Special considerations and employer status under COBRA minimum employees rules
COBRA continuation coverage can be affected by changes in an employer’s business status. Employees should be aware of how circumstances such as a company closure or restructuring may impact their benefits.
Employer bankruptcy or closure
If an employer goes out of business and no longer offers a health plan to any active employees, COBRA coverage typically ends. However, in certain cases—such as when a company files for bankruptcy—retirees and former employees may still be eligible for continued coverage.
COBRA coverage duration
COBRA coverage generally lasts for 18 months but can extend up to 36 months in certain situations, such as a dependent losing coverage due to the covered employee’s death or divorce.
Who to contact for COBRA-related questions
Employers are responsible for informing employees about their COBRA rights. Employees should contact their former employer’s benefits administrator or COBRA plan administrator for details regarding their specific coverage options.
By understanding these COBRA regulations and the COBRA minimum employees requirement, employees and dependents can make informed decisions about their healthcare coverage after experiencing a qualifying event.
