OTHER HEALTH CONCEPTS · 4 MIN READ
COBRA Continuation Coverage Rules
Federal COBRA gives employees and their families the right to continue employer group health coverage temporarily after events that would otherwise end it. It applies to group health plans of employers that had 20 or more employees on a typical business day in the prior calendar year, counting part-timers as fractions of full-time hours. Employers below 20 escape federal COBRA, though many states run mini-COBRA laws that fill the gap for small-group insurance. Continuation is not free coverage: the plan may charge the qualified beneficiary up to 102% of the applicable premium — the full cost of coverage for similarly situated active employees, both the employer and employee shares, plus a 2% administrative markup. Duration depends on the qualifying event. Ordinary events — termination of employment (other than for gross misconduct) or a reduction in hours — support 18 months of continuation. If a qualified beneficiary is determined disabled by Social Security within the relevant window, coverage can be extended to 29 months. Events that strip dependents of coverage — the employee's death, divorce or legal separation, the employee becoming entitled to Medicare, or a child aging out of dependent status — support 36 months, and a second qualifying event during an 18-month spell can likewise stretch the total to 36 months. Plan administrators face statutory penalties for failing to give required COBRA notices. COBRA interacts with the rest of the coverage landscape. Losing group coverage is a qualifying event that opens special enrollment in other group coverage or the ACA marketplace, so COBRA is one option among several rather than a default. And military families have their own analog: TRICARE Reserve Select and related continuation options serve reservists and their dependents outside the employer system. For exam purposes, keep the anatomy straight: who is covered (20+ employee plans), what it costs (102%), and how long each event lasts (18, 29, or 36 months).
Key rules
Federal COBRA applies to employers with 20 or more employees on a typical business day.
The count uses the prior calendar year, aggregating part-time workers as fractional employees. Smaller employers may instead be covered by state mini-COBRA statutes.
Why the exam cares: The 20-employee threshold is a direct-recall question, with 15 (Title VII) and 50 (ACA employer mandate) as planted distractors.
The maximum COBRA premium is 102% of the applicable group premium.
The applicable premium is the plan's full cost for similar active employees — employer plus employee shares — and the 2% markup covers administration.
Why the exam cares: Exams test both the number and the concept that the beneficiary now bears the entire cost, not just the old employee share.
Termination or reduced hours buys 18 months of continuation coverage.
Gross-misconduct terminations are excluded. The 18-month clock is the baseline that extensions build on.
Why the exam cares: Matching each qualifying event to its months is the core COBRA question format.
Disability extends coverage to 29 months; dependent-loss events support 36 months.
A Social Security disability determination stretches an 18-month event to 29 months. Death, divorce, Medicare entitlement, or a child aging out gives dependents 36 months, and a second qualifying event can extend an 18-month period to 36.
Why the exam cares: The 18/29/36 ladder and which event triggers each rung is the most heavily tested detail in this topic.
Losing group coverage triggers special enrollment rights elsewhere.
Loss of minimum essential coverage opens a special enrollment period in another group plan or the individual marketplace, making COBRA optional rather than automatic. Administrators owe notices, with penalties for failure.
Why the exam cares: Scenario questions test whether a laid-off worker must take COBRA — the answer is no; special enrollment is an alternative.
Numbers to memorize
- 20+ employees — employer size threshold for federal COBRA applicability
- 102% — maximum continuation premium (full group cost plus 2% administrative fee)
- 18 months — continuation after termination or reduction in hours
- 29 months — extended continuation when Social Security finds the beneficiary disabled
- 36 months — continuation for dependents after death, divorce, Medicare entitlement, or aging out (also the multi-event maximum)
Common traps
- Charging COBRA enrollees only the old employee share — remember the beneficiary can be billed the full plan cost plus 2%, totaling 102%.
- Giving 36 months for a job termination — remember termination and reduced hours are 18-month events; only dependent-loss events and multi-event stacking reach 36.
- Applying federal COBRA to a 10-employee firm — remember employers under 20 are exempt federally, though a state mini-COBRA law may apply.
- Assuming COBRA is the only option after job loss — remember losing group coverage opens special enrollment in other group or marketplace coverage.
Recite the COBRA skeleton — 20 employees, 102%, 18/29/36 — before the exam; nearly every COBRA question is one of those numbers wearing a scenario.
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