An insured or self-funded health plan that provides medical coverage to employees and their dependents must provide the employees and dependents with the right to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) if that coverage is lost following a qualifying event. COBRA requires a qualified beneficiary be permitted to elect continuation coverage within an applicable election period.
COBRA applies to employers with 20 or more employees. COBRA requires that a notice be provided when health coverage first becomes effective and again after a qualifying event occurs. Failure to provide this initial notice, as well as failure to provide the qualifying event notice discussed below, subjects a plan administrator to penalties under both ERISA and the Internal Revenue Code.
COBRA continuation coverage generally will end no later than the termination of the applicable 18-, 29- or 36-month continuation period. However, coverage may be terminated before the expiration of the continuation period upon the occurrence of any one of the following events: