BASIC (09-11)

DI 11080.001 Consolidated Omnibus Budget Reconciliation Act (COBRA)

Citations:

Public Law No. 99-272

A. Background on COBRA

On April 7, 1986, Congress enacted the Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions. COBRA provides continuation of group health insurance coverage to certain workers and their families that would otherwise be terminated. These COBRA provisions generally apply only to employers with 20 or more employees.

Several agencies administer COBRA continuation provisions. The Departments of Labor and Treasury have jurisdiction over private-sector group health plans. The Department of Health and Human Services administers the continuation coverage law as it affects public-sector health plans.

IMPORTANT: In 1989, Congress amended COBRA to allow qualified individuals who stopped working due to disability to extend their health insurance coverage.

The Social Security Administration (SSA) is only responsible for making disability decisions for the extension of COBRA coverage under the provisions described in DI 11080.001C in this section.

B. Provisions of COBRA

An employee, the employee’s spouse, and the employee’s dependent children covered by a group health plan on the day before a “qualifying event” are qualified individuals. In certain cases, a retired employee, the retired employee’s spouse, and the retired employee’s dependent children may be qualified beneficiaries. In addition, any child born to, or placed for adoption with a covered employee during the period of COBRA coverage is a qualified individual.

1. Qualifying events for employees

  • Voluntary or involuntary termination of employment (for reasons other than “gross misconduct”); or

  • Reduction in the number of hours of employment.

2. Qualifying events for spouses

  • Voluntary or involuntary termination of the covered employee’s employment (for any reason other than “gross misconduct”);

  • Reduction in the hours worked by the covered employee;

  • Covered employee becomes entitled to Medicare;

  • Divorce or legal separation of the covered employee; or

  • Death of the covered employee.

3. Qualifying events for dependent children

  • Any of the events in DI 11080.001B.2. in this section, for spouses; or

  • Loss of “dependent child” status under the plan rules.

NOTE: The definition of employee, spouse, and child are based on the plan rules—not SSA definitions.

Under the law, the premium for this coverage will not exceed 102 percent of the group rate.

The qualified individual has a 60-day period to elect whether to continue coverage. This period begins with the later of:

  • the date that coverage was lost, due to termination of employment or reduction in hours (the "qualifying event"); or

  • the date the employer sends notification to the individual that he or she can elect coverage.

The period of coverage is 18 months for qualifying individuals based on employment termination or reduced hours.

For spouses and dependent children qualifying on a basis other than termination or reduced hours of the employee, the coverage period is 36 months.

Each qualified individual may independently elect COBRA coverage.

C. Extension of COBRA based on disability

A qualified individual entitled to an 18-month maximum period of coverage continuation, may become eligible for an extension when a qualified beneficiary (employee, spouse, or child) is disabled. To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must:

  • Have a determination from the Social Security Administration that he or she became disabled prior to the expiration of the 60th day of COBRA continuation coverage.

  • Send the plan administrator a copy of the Social Security determination letter within 60 days of receipt, but prior to expiration of the 18-month period of coverage.

If the qualified individual meets these requirements, the entire family qualifies for an additional 11 months of COBRA continuation coverage (for a total maximum period of 29 months).

The individual must also notify the plan administrator within 30 days of any determination that he or she is no longer disabled.

Under the law, the premium for this co