The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows certain individuals covered under a group health plan to continue that coverage in certain circumstances when it would otherwise cease. A COBRA election is required for a covered individual when there is a triggering event that causes (or will cause) a loss of coverage.
The COBRA triggering events include the following (if they result in a loss of health coverage):
Employers should be aware of the maximum coverage periods for COBRA are as follows:
Special Rules
There are special rules for newborn or adopted children. A child who is born to or placed for adoption with a covered employee during a period of COBRA coverage is a qualified beneficiary. The maximum COBRA coverage period for the child would be the remainder of the maximum coverage period for the continuant’s qualifying event.
There are also special timing rules for health flexible spending account plans. COBRA coverage for health FSAs may be terminated at the end of the plan year in which the qualifying event occurs.
Extension of Coverage Period
The maximum coverage period may be extended from 18 months in certain limited situations if the initial qualifying event is the termination of employment or reduction in hours.
Employers subject to the COBRA rules should be aware of the various timing rules under COBRA.