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COBRA stands for the Consolidated Omnibus Budget Reconciliation Act.

What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act of 1985, amended the Employee Retirement Income Security Act, and requires that an employer who sponsors a group health plan to give the plan’s “qualified beneficiaries” the opportunity to elect “continuation coverage” under the plan when the beneficiaries might otherwise lose coverage upon the occurrence of certain “qualifying events,” including:

  • Death of the covered employee,
  • Termination of the covered employee’s employment (except in cases of gross misconduct),
  • Reduction in hours, or
  • Divorce or legal separation from the covered employee.

The COBRA amendments to ERISA are contained in Part 6 of Title I of ERISA.
A “qualified beneficiary” entitled to make a COBRA election may be a “covered employee,” (someone covered by the employer’s plan because of his own employment), or a covered employee’s spouse or dependent child who was covered by the plan prior to the occurrence of the “qualifying event.”

COBRA demands that the continuation coverage offered to qualified beneficiaries be identical to what the plan provides to plan beneficiaries who have not suffered a qualifying event. The statute requires plans to advise beneficiaries of their rights under COBRA both at the commencement of coverage and within 14 days of learning of a qualifying event after which qualified beneficiaries have 60 days to elect continuation coverage. If a qualified beneficiary makes a COBRA election, continuation coverage dates from the qualifying event, and when the event is termination or reduced hours, the maximum period of coverage is generally 18 months; in other cases, it is generally 36.

The beneficiary who makes the election must pay for what he gets, however, up to 102 percent of the “applicable premium” for the first 18 months of continuation coverage, and up to 150 percent thereafter. The “applicable premium” is usually the cost to the plan of providing continuation coverage, regardless of who usually pays for the insurance benefit.

Benefits may cease if the qualified beneficiary fails to pay the premiums and an employer may terminate it for certain other reasons, such as discontinuance of the group health plan entirely. COBRA coverage may also cease on the date on which the qualified beneficiary first becomes, after the date of the election covered under any other group health plan (as an employee or otherwise), which does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary, or entitled to benefits under title XVIII of the Social Security Act.

Who is Covered

COBRA covers people employed by companys with 20 or more employees.

How long does COBRA protection last?

Generally, 18 months, although a longer period may apply.

What’s a Qualifying Event?

It’s the event that causes you to lose your health care coverage.  The particular type of event will determine how long you can maintain benefits.

Qualifying Events for Employees:

  • Voluntary or involuntary termination of employment for reasons other than gross misconduct
  • Reduction in the number of hours of employment

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’s becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

Qualifying Events for Dependent Children:

  • Loss of dependent child status under the plan rules
  • 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’s becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee


Plaintiff’s suing for violation of COBRA may do so under ERISA’s civil enforcement provisions (section 502 of the Act, codified at 29 U.S.C. § 1132), which do not contain a statutes of limitations. In general, the federal courts will look to the most analogous state statute of limitations.


COBRA does not apply to any group health plan for any calendar year if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year.

Remedies and Damages

Under ERISA’s enforcement provisions, a plan participant or beneficiary, may bring a civil action in court to:

  • Recover benefits due and enforce rights under the plan.
  • Get access to plan documents that have been requested in writing. If your plan administrator does supply the plan documents within 30 days of the written request, a court could find the plan administrator personally liable for up to $100 per day (unless the failure results from circumstances reasonably beyond his or her control).
  • Clarify rights to future benefits.
  • Get appropriate relief from a breach of fiduciary duty.
  • Enjoin any act or practice that violates the terms of the plan or any provision of Title I of ERISA, such as the reporting and disclosure, participation, vesting or funding, and fiduciary provisions, or to obtain other equitable relief.
  • Enforce the right to receive a statement of vested benefits upon termination of employment.
  • Obtain review of a final action of the Secretary of Labor, to restrain the Secretary from taking action contrary to ERISA, or to compel the Secretary to take action.
  • Obtain review of any action of the PBGC or its agents that adversely affects you.
  • Reasonable attorneys fees may be awarded to the prevailing party.

In addition, the sponsor of a group health plan that fails to comply with COBRA is subject to an excise tax of $100 per day for each affected beneficiary (where violation is due to reasonable cause and not willful neglect the maximum annual liability is the lesser of 10% of the employer’s health plan expense or $500,000).

More Information

COBRA Articles.

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