Do small businesses have to offer COBRA?
Asked by: Russel Kovacek I | Last update: September 2, 2025Score: 4.4/5 (25 votes)
Do small companies need to offer COBRA?
COBRA applies only to companies with at least 20 employees. Employers are required to notify you when you are eligible for these benefits. If you elect to receive COBRA benefits, you will pay 100% of the total premium for your benefits plus a 2% administrative fee.
Can a company refuse to offer COBRA?
You do not have to offer COBRA coverage to any of the following: an employee who is not yet eligible for your group health plan. an eligible employee who declined to participate in your group health plan. an individual who is enrolled for benefits under Medicare.
What companies are exempt from COBRA?
Indemnity policies, PPOs, HMOs, and self-insured plans are all eligible for COBRA extension; however, federal government employee plans and church plans are exempt from COBRA.
Does my employer have to offer COBRA if I quit?
Yes, You Can Get COBRA Insurance After You Quit Your Job
Known as the Consolidated Omnibus Budget Reconciliation Act of 1985, this legislation applies to employers with 20 or more employees. State-level Mini-COBRA laws extend similar requirements to small businesses with fewer than 20 full-time employees.
do small businesses have to comply with the consolidated omnibus reconciliation act of 1985 or cobra
What is the COBRA loophole?
If you decide to enroll in COBRA health insurance, your coverage will be retroactive, meaning it will apply to any medical bills incurred during the 60-day decision period. This loophole can save you money by avoiding premium payments unless you actually need care during this time.
What is the average cost of Cobra insurance?
A COBRA premium can cost on average $400 to $700 a month per person.
Why is COBRA so expensive?
Why is COBRA more expensive than employer-sponsored insurance? COBRA is more expensive because the individual is responsible for the entire premium amount without the employer's financial contribution that is provided during active employment.
What companies does COBRA apply to?
COBRA applies to most private sector businesses with 20 or more employees. It requires an employer's group health insurance plan to continue after qualifying life events. These include: Termination or a reduction of a covered employee's hours.
Does COBRA coverage begin immediately?
Assuming one pays all required premiums, COBRA coverage starts on the date of the qualifying event, and the length of the period of COBRA coverage will depend on the type of qualifying event which caused the qualified beneficiary to lose group health plan coverage.
What if my employer didn't send me a COBRA?
What If I Did Not Receive a COBRA Election Letter? We recommend working with the employer's human resources department. Call and ask them to resend the health insurance continuation election form. They may refer you to their third-party administrator.
Can you sue a company for not offering COBRA?
In certain cases, yes, you can sue your employer for not offering COBRA. Employers are obligated to inform eligible employees about the availability of insurance coverage under COBRA and the requirement for employees to pay the full premium.
What is the penalty for not offering COBRA?
Penalties for Non-Compliance
Failing to adhere to COBRA rules can result in costly penalties. The Department of Labor may impose fines of $110 per day per qualified beneficiary for non-compliance with notice requirements, and the IRS can levy excise taxes for violations.
Can a company deny COBRA coverage?
Under COBRA, a person who has been terminated for gross misconduct may be denied COBRA. Gross misconduct is not specifically defined by COBRA, but when based on an employer's practice or policy it could include misrepresentation during the hiring process or falsifying information on a Form I-9.
What is the small employer exception for COBRA?
Who qualifies for the small employer exception? A group health plan is not subject to COBRA for a calendar year if the employer maintaining the plan normally employed fewer than 20 employees on typical business days during the preceding calendar year.
What size employer has to offer COBRA?
COBRA generally applies to all private-sector group health plans maintained by employers that had at least 20 employees on more than 50 percent of its typical business days in the previous calendar year.
Do companies have to pay for COBRA?
Yes, an employer can pay all or part of a former or current employee's COBRA premiums. Employers may do so as a means to assist an employee during a merger, acquisition, layoff, termination, temporary or permanent disability, retirement, or as part of a recruitment strategy.
Which states have mini COBRA laws?
- Arizona.
- Arkansas.
- California.
- Colorado.
- Connecticut.
- District of Columbia.
- Florida.
- Georgia.
Is it better to use COBRA or obamacare?
ACA plans may offer significant cost savings through subsidies that aren't available under COBRA. By transitioning to an ACA plan, you can often find more affordable coverage without waiting until COBRA expires, giving you flexibility in managing your healthcare costs.
Is there a cheaper alternative to COBRA?
Not only are Marketplace health insurance plans typically less expensive than COBRA, most Marketplace applicants (91% in 2022) qualify for at least some government subsidy to help pay their premiums. The amount of the subsidy depends on your income, where you live and the size of your family.
What are the cons of COBRA?
- It's expensive. Your premiums will probably go up since your employer isn't contributing. ...
- You're subject to your employer's plan offerings. You might lose COBRA coverage if the employer changes its plan or goes out of business.
How much does 1 month of COBRA cost?
Based on plan and state, COBRA costs range from about $400 to $700 per month and are based on the following: Your previous monthly insurance contribution. Your recent employer's monthly insurance contribution.
How do I find out how much COBRA will cost me?
If you want to figure this out on your own, ask HR how much your employer is contributing toward your monthly coverage. Then, check your pay stub to see how much you're contributing. After adding these figures, add another 2% (for the service fee). This will show you exactly how much you'll expect to pay for COBRA.
Can I get COBRA if I quit?
Whether you quit, get fired or are laid off, you may be able to choose your former employer's health plan under a federal law called COBRA. That stands for Consolidated Omnibus Reconciliation Act. It's available if: You were enrolled in an employer-sponsored medical, dental or vision plan.