Are companies legally required to offer COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires certain employers to offer continuation coverage to employees and their families who lose their health benefits due to certain qualifying events. But are companies legally required to offer COBRA? The answer is not as straightforward as it may seem, as it depends on several factors.
In the United States, COBRA applies to employers with 20 or more employees, including full-time and part-time employees. The law was enacted in 1986 to provide employees with the option to continue their group health plan coverage at their own expense for a limited period of time after certain qualifying events, such as termination of employment, reduction in hours, or the death of the covered employee.
Understanding the qualifying events
To determine whether a company is legally required to offer COBRA, it is essential to understand the qualifying events. The following events may trigger COBRA continuation coverage:
1. Termination of employment: This includes both voluntary and involuntary termination, except for gross misconduct.
2. Reduction in hours: If an employee’s hours are reduced to less than 30 hours per week, they may be eligible for COBRA coverage.
3. Death of the covered employee: The surviving spouse and dependent children of the deceased employee may be eligible for COBRA coverage.
4. Divorce or legal separation: The covered spouse or dependent children may be eligible for COBRA coverage.
5. Loss of eligibility for coverage due to a dependent’s attainment of age or other qualifying event: For example, if a child turns 26 and is no longer eligible for coverage under the parent’s plan, they may be eligible for COBRA.
Employer obligations under COBRA
If a company is subject to COBRA, it must provide certain notices and comply with specific requirements:
1. COBRA election notice: The employer must provide a COBRA election notice to the qualifying individual within 30 days of the qualifying event.
2. Premium payment notice: The employer must provide a premium payment notice to the qualifying individual, detailing the amount due and the due date.
3. Continuation coverage: The employer must offer the same coverage to the qualifying individual as was provided to active employees.
4. Special enrollment rights: If a qualifying event occurs, the employer must offer the qualifying individual the opportunity to enroll in coverage that may not have been available to them previously.
Exemptions and exceptions
While most employers with 20 or more employees are required to offer COBRA, there are some exceptions and exemptions:
1. Small employers: Employers with fewer than 20 employees are not subject to COBRA.
2. Church plans: Certain church plans are exempt from COBRA requirements.
3. Certain government employees: Employees covered by a federal Employees Health Benefits (FEHB) plan are not subject to COBRA.
In conclusion, while most companies with 20 or more employees are legally required to offer COBRA, it is essential to consider the specific circumstances of the qualifying event and the employer’s obligations under the law. Understanding the requirements and exemptions can help both employers and employees navigate the complexities of COBRA coverage.
