What types of employers are exempt from COBRA?
Asked by: Josianne Bauch | Last update: January 22, 2026Score: 4.6/5 (71 votes)
What employers 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.
Who is not covered under 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 disqualifies you from COBRA?
Why would an employee not qualify to enroll in Cal-COBRA? The employee is enrolled in or eligible for Medicare. The employee does not enroll within 60 days of receiving the notice of eligibility from the employer. The employee is covered by another health plan.
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.
COBRA Employment Laws Explained - COBRA Admins
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.
Can I sue my employer for not offering COBRA?
The employees along with the beneficiaries have the right to sue to cover the medical expenses that would have taken place when the COBRA should have been offered.
What are the rules for COBRA coverage?
- Your group health plan must be covered by COBRA.
- A qualifying event must occur.
- You must be a qualified beneficiary for that event.
Can I waive COBRA?
If you waive COBRA coverage during the election period, you must be permitted later to revoke your waiver of coverage and to elect continuation coverage as long as you do so during the election period.
Why is COBRA so expensive?
COBRA coverage is not cheap.
Why? Because you're now responsible for paying your portion of your health insurance: The cost your employer contributed to your premium, in addition to the 2% service fee on the cost of your insurance.
Can you be turned down for COBRA?
If the former employee is considered an eligible plan participant, then he or she would be a qualified beneficiary and entitled to COBRA coverage unless the second exception (denial based on gross misconduct) is applied. Under COBRA, a person who has been terminated for gross misconduct may be denied COBRA.
Does everyone get 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. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA.
Does COBRA cost the employer?
(California passed a similar law known as “Cal-COBRA.”) Under COBRA, the group plan health insurance plan made available to terminated workers provides the exact same benefits as they would receive if they were still a member of the group, except that the employees have to pay the employer's cost of providing the ...
Do small businesses have to offer COBRA?
If you are a small business owner, you are most likely required to offer COBRA continuation coverage. This law applies to every private sector employer or health plan that has over 20 employees. Like most employment and HR laws, there is a specific definition for what a full-time employee is.
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.
Does COBRA start after severance?
When employees lose their jobs and are offered severance, it's common for employers to pay all or a portion of the COBRA premiums for a few months on a pre-tax basis (although not required by law).
How to decline COBRA coverage?
- Terminate coverage on your online account. For instructions, see How to terminate coverage in your COBRA online account.
- Submit a completed COBRA Benefits Termination Form.
- Do not remit the premium payment for the month you no longer want coverage.
Is COBRA ever free?
Unemployed Americans who lost their jobs in the last 18 months may qualify for free health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA.
How does COBRA work if I quit my job?
COBRA coverage lets you pay to stay on your job-based health insurance for a limited time after your job ends (usually 18 months). You usually pay the full premium yourself, plus a small administrative fee. Contact your employer to learn about your COBRA options.
Does COBRA apply in Canada?
COBRA health insurance is not available in Canada, and there is no direct COBRA equivalent in Canada — as Canada has its universal healthcare system.
Can you stay on COBRA after getting a new job?
Yes, you can keep COBRA coverage even when your new employer offers health insurance. The decision to retain COBRA or opt for the new employer's plan depends on your personal circumstances, such as comparing benefits and costs. There's no federal mandate to cancel COBRA upon obtaining new job-based insurance.
What is the grace period for COBRA payments?
After you are established on your COBRA coverage, ongoing monthly payments are due the first day of each month. There is a grace period of 30 days from the due date for ongoing monthly premium payments. If you mail your payment, it must be postmarked within the 30-day grace period.
What if my employer did not offer COBRA?
What Happens when the Employer Fails to Comply with COBRA? The recommendation is to first try to work it out directly with the human resources department that provides the insurance. If you meet resistance with the employer on starting COBRA, you may call the Department of Labor to file a complaint.
How long does my former employer have to offer me a COBRA?
Your employer must mail you the COBRA information and forms within 14 days after receiving notification of the qualifying event. You are responsible for making sure your COBRA coverage goes into and stays in effect - if you do not ask for COBRA coverage before the deadline, you may lose your right to COBRA coverage.
Can I refuse COBRA?
Decide not to participate in COBRA and apply for special enrollment through Covered California. Because you will be newly uninsured, you will qualify for special enrollment in a Covered California health insurance plan outside of the annual open-enrollment period.