COBRA: What You Need To Know

COBRA: What You Need To Know text overlaying image of cobra written on a wooden tableDue to recent events, unemployment in the U.S. has reached an all-time high. And because our healthcare system often ties coverage to work, there are a lot of people who could lose their access to healthcare. If you, like many employers, are worried about your workers in these uncertain times. Remember that if you have to let them go or cut their hours, they can keep their coverage for a certain amount of time. COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) lets your workers keep the insurance coverage you provided them. Even though your employee pays the payments, there are still things you need to know and do about COBRA.

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What is COBRA?

COBRA was created in 1986 as part of the larger Employee Retirement Income Security Act of 1974 (ERISA). It gives certain workers the right to pay premiums and keep their group health insurance coverage in certain situations. Before Congress passed the ERISA law, people who had health insurance through their employer lost it as soon as they left their job for any reason. After COBRA was passed, workers who left a company that offered health insurance could choose to keep their coverage temporarily. COBRA coverage is often much more expensive than what active employees pay for their group health plan because the company typically pays for some or all of the coverage. 


Under COBRA you, as the employer, are no longer responsible for any health insurance costs. All medical bills can be charged directly to the ex-employee who is receiving the services. COBRA is usually offered to qualifying employees for anywhere between 18-36 months. However, COBRA eligibility and how long the coverage continues depends on certain circumstances.

Who Is Required To Offer COBRA?

First, you should find out which companies are required by federal law to offer COBRA coverage. If you run a private business with 20 or more employees and offer a group health plan, COBRA rules apply to you. Your employee handbook should have information about it.  But even if you don’t think any of the above applies to you or your business, there are still a few other things to think about. COBRA adds up the hours of two or more part-time workers to make one full-time worker. So, if you have two workers who each work 20 hours. The law says that they are the same as one full-time worker. 


Another thing to think about is that even if the federal government doesn’t require you to offer COBRA coverage, your state might. Some states have passed “mini-COBRA” rules that cover people who work for businesses with group health plans, but have fewer than 20 employees.

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Like federal COBRA, mini-COBRA laws require group health plans to give continuing health coverage to eligible employees who would otherwise lose coverage because of a qualifying event. One big difference is that mini-COBRA rules cover a wider range of people. Mini-COBRA rules usually cover employers with less than 20 workers, while federal COBRA only covers employers with 20 or more workers. In a few states, the number of workers is between 2 and 19. Some states require almost all workers, no matter how big or small, to follow the rules of mini-COBRA.


The length of coverage changes by state. It can be as short as 2 to 6 months or as long as 39 weeks or even forever if the employee meets certain conditions, such as becoming totally disabled while working. In some places, employees are eligible for mini-COBRA even if they were fired for being a bad employee. There is some kind of mini-COBRA law in the following 40 states:


  • Arkansas
  • California
  • Colorado
  • Connecticut
  • District of Columbia
  • Florida
  • Georgia
  • Illinois
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi
  • Missouri
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • West Virginia
  • Wisconsin
  • Wyoming

If your business is subject to mini-COBRA, you have to let eligible workers know that state law gives them the right to keep their coverage. The date for giving notice varies by state, so check your state’s laws to make sure you get the word out on time. Even though the rules for other mini-COBRA notices vary by state, they may be similar to those for federal COBRA.

When Does COBRA Apply to Group Health Plans?

The law says that a group plan is “any arrangement that an employer sets up or keeps up to provide medical care for employees or their families.” This can be done through insurance, a health maintenance organization, the employer’s assets, or some other way. Group health plans that don’t meet this definition are not covered by COBRA, but they may be subject to certain state continuation rules. COBRA does not apply to other group benefits, like life insurance or disability payments. If your business has 20 or more workers and offers group health insurance of any kind, it’s best to talk to an expert about COBRA eligibility to avoid fines or penalties.

Eligible Employees

Employees may be qualified for COBRA continuation coverage if they are enrolled in an eligible group health plan and meet certain qualifying event requirements. This could mean:


  • Full-time employees
  • Part-time employees
  • Spouses of eligible employees
  • Dependents of eligible employees
  • Retirees

There are limits to how long a company has to offer COBRA coverage. Even if the business has at least 20 employees, some employees won’t be able to get COBRA coverage because they didn’t choose a qualifying plan, the reason they were fired, or there were other special situations. This could mean:


  • Employees who are ineligible for coverage in the group plan
  • Workers who declined to participate in the group health coverage
  • Employees who are enrolled for benefits under Medicare
  • Employees terminated for gross misconduct

In addition to being an employee and being enrolled in a qualified group health plan, an employee must also have a qualifying event for COBRA coverage to continue. Usually, this will include something that causes the employee to lose group health benefits. For example, if an employee is fired for something other than gross misbehavior, their hours are cut, or they are laid off temporarily or permanently, they lose their benefits. Qualifying events can also include an employee’s spouse or dependents if they cause a change in status for the whole family and affect the family’s ability to keep health care. COBRA can be used to continue coverage for a spouse or child if:


  • The covered employee passes away
  • If a spouse gets divorced or legally separated
  • The spouse or child lost coverage because the employee qualifies for Medicare
  • The dependent child is no longer dependent on the employee (aging out of their parent’s coverage)

Employer Responsibilities

Plan administrators are required by law to tell people who are qualified when their status changes. In some cases, the employer is in charge of running the plan and must take care of all of these tasks. If you have workers who might be eligible for COBRA, you must do the following:


  • Tell the group health plan administrator within 30 days of a qualified event if a person is eligible for COBRA.
  • Give notice to employees who are qualified for COBRA within 44 days about their COBRA rights.
  • If COBRA coverage is rejected for any reason, let the people who need it know within 14 days.
  • If the employee chooses to keep coverage under COBRA, give them the same coverage as the plan they were on before the qualified event.

Once an employee has a qualifying event, COBRA requires group health plans to give the employee and any qualifying partner or dependents a time to decide if they want to keep their coverage under COBRA. Once the qualifying event happens, the person must have 60 days to choose to keep benefits or not. Even though everyone in a household who went through the same qualifying event has the same election period, each person’s election method is different. The employee, their partner, and any qualifying dependents can choose to get coverage or not, depending on what is best for them.

How EZ Can Help

Taking care of your workers is part of being the boss, and that means making sure they can get health care. A big part of your job is to know what their rights are and let them know about them, even after they’ve left your company. If you don’t stay on top of things like COBRA, you could face fines. We at EZ.Insure know that running a business is hard and that insurance is just one more thing to think about. We’d like to take some of that weight off your shoulders by giving you free, instant access to an informed agent. Enter your zip code in the bar below to start, or call 877-670-3531 to talk to an agent if you have questions or are looking for a new plan.

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Group Insurance For Furloughed & Laid Off Employees

The coronavirus pandemic has taken a toll on many small businesses, and many are now struggling to stay afloat. In order to keep going, many small business owners had no choice but to furlough or lay off employees in order to save money. If you are one of them, you might be wondering what your former employees’ health insurance options are after you let them go. Is there still a way you can offer them group insurance? You can choose whether to pay monthly health insurance premiums on behalf of your employees, but if it is not possible due to financial constraints, your employees do have other options.

Furloughed Vs. Laid Off

person carrying a box of office supplies.

Health coverage for an employee is determined by the employer’s (your) health plan. The plan indicates how many hours an active employee has to work to be eligible for health insurance. There are also rules surrounding what happens to their health insurance when they are no longer an active employee. When an employee is :

  • Laid off, their employment is terminated, even if you are considering the lay off temporary. After an employee is laid off, their health insurance plan ends on the last day of the month they were laid off.
  • Furloughed, their hours are reduced, or they might not be working at all. The difference is that they can expect to return to work again when the furlough is over, so they can continue to get health insurance coverage during the furlough period. If this is the case, the employee will either be responsible for their share of the plan’s premiums, or you, the employer, can temporarily waive employee contributions and pay all of their premium.

ERISA & Federal Income Tax Rules

In general, nothing actually prevents you from paying monthly premiums on behalf of furloughed or laid-off employees. You have the option to choose to pay monthly premiums as long as you are able to. The premium will continue to be excludable from the gross income of the employees. Be aware, though, that if the plan rules do not permit an employee to be covered, then you are in danger of:

  • Potential loss of tax-exempt status of the plan, which means both you and your employees might owe back taxes, since pre-tax qualification would be lost.
  • Your insurance company denying claims for any employees that they determine are not eligible to participate in the plan. 
  • A possible fiduciary breach under the Employee Retirement Income Security Act (ERISA) if plan assets were used to pay for benefits of non-eligible employees.

    COBRA on a piece of paper.
    Laid-off and furloughed employees qualify for COBRA insurance.

COBRA Insurance

Another option to continue coverage for your employees is the COBRA program. Both laid-off and furloughed employees qualify for a Consolidated Omnibus Budget Reconciliation Act (COBRA) plan if their group plan is terminated and you can no longer pay their premiums. COBRA can be expensive for your former employees, because if you do not contribute to their premiums, they will have to pay the full amount. 

ACA Marketplace

Last but not least, losing a job is considered a qualifying life event, so a Special Enrollment Period will open up for your former or furloughed employees after they lose their job and their coverage. This means that they will have 60 days to get a health insurance plan on the ACA Marketplace. This could be a cheaper option for your employees than COBRA.

EZ Can Help

The pandemic has actually caused some changes in the way that group health insurance works. For example, some states have issued orders requiring or encouraging insurance companies to allow employers to make changes to their eligibility requirements so they can continue to offer group insurance to furloughed or laid off employees. Some states are even allowing a grace period for premium payments. To find out if your state is one of them, speak to an EZ agent, who can help find out the information for you. If you are interested in continuing to offer a group insurance plan, we can help you find a reasonable way to provide insurance to the employees that you had to let go. The times we are living in are not normal by any means, and we know it is not an easy decision to let go of your valued employees. EZ can help by offering our services for free, which includes checking all possible options, answering any questions, and comparing quotes.

To get started, simply enter your zip code in the bar above, or to speak directly with an agent, call 888-998-2027.

Health Insurance Coverage After Policy Owner Passes

When a loved one passes away, the last thing on your mind is your health insurance plan. But once you are ready to look into it, you might find that, unfortunately, there isn’t a lot of information about what to do with your plan after someone passes away. You should know that the death of either the policy owner or a dependent will affect your health plan. The plan might no longer meet your needs or could be too expensive for you to afford on your own; it could even be cancelled due to non-payment if you cannot afford it. 

a stopwatch with the number 60 in red in front of it
When a policy owner passes, you have a 60 day special enrollment period to enroll in a new plan or change plans.

You do have the opportunity to change your plan, though: the death of the policy holder (or a dependent) is considered a Qualifying Life Event and will open up a Special Enrollment Period for you. This means that you will not have to worry about the affordability of your plan or about losing your health insurance coverage amid the tragedy. It is important to know all of your options so you can make the best decision about your healthcare plan. 

What Is a Special Enrollment Period (SEP)?

In most cases, you can only change your health insurance plan or purchase a new one during the Open Enrollment Period from November 1 through December 15. Outside of the OEP, you can no longer enroll or change your plan unless you experience a life event that qualifies you for a Special Enrollment Period. If you do experience a qualifying life event, you will have 60 days from the event to enroll in a plan. If you miss the 60 day window, you will have to wait until the next Open Enrollment Period.

Death Of A Policy Owner/Spouse

Having health insurance is important for you and your family, and it does not have to end with the unfortunate loss of your spouse. If you were on your spouse’s individual health insurance (NOT an employer-based plan), you can keep your policy even after the passing of your spouse. But if the plan is too expensive and you do not qualify for any subsidies, you can shop around for a new plan. The death of your spouse qualifies you for a Special Enrollment Period, so you will be able to shop for a new plan, or change your existing coverage. You will have 60 days after the death to purchase a plan. 

COBRA InsuranceCOBRA written on a piece of paper with a pen next to it

If your spouse passes away, and you were on their employer-based plan, you can  look into COBRA insurance through your spouse’s employer. With COBRA health insurance, you can keep the plan you had through your spouse’s employer for 36 months. One thing to be aware of is that you will need to pay 100% of the plan’s premiums, plus a 2% administrative fee. This means that you will be paying more for the same coverage, because your spouse’s employer will no longer pay a portion of the monthly premium.

Remember, you do not have to stay on your late spouse’s employer-based insurance plan. It is just an option to continue coverage, if need be. You can also decide to shop for a new plan on the Marketplace or through a private insurer. 

Death Of A Dependent

The death of a dependent also qualifies your family for a Special Enrollment Period, as long as the dependent was on your health insurance plan. This applies even if your dependent did not contribute any income to your household. As with any qualifying life event, you will have 60 days to enroll in or change your health insurance plan after the death.

white casket in a church with red roses placed over it

 Losing a loved one is a tragic time that brings up not only a lot of emotions, but also a lot of questions. One of the questions you might have after dealing with the grief is what will happen to your health insurance coverage. Fortunately, you will have the opportunity to find a plan that meets your family’s needs during the 60-day Special Enrollment Period window. 

EZ.Insure cares about you and wants to make the process of staying insured as easy as possible for you during this tough time. One of our licensed agents will compare plans within your area, and review all available options to find the best and most affordable plan for your family. You will not have to worry about health insurance because we will guide you and help you to figure it all out. Our services are always free, because we just want to help you. To get started, simply enter your zip code in the bar above, or to speak to an agent, call 888-350-1890.