COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.

Determining COBRA Status

• COBRA applies to plans that have 20 or more employees on a typical business day during the prior calendar year. An employer is considered to have normally employed less than 20 employees during a calendar year if it had fewer than 20 employees on at least 50% of its typical business days during that year. 

• "Employees" for this purpose means FT and PT employees, however, employers can count PT employees as fractional employees for purposes of the count to 20. The fraction is equal to the number of hours that the part-time employee works divided by the number of hours that an employee must work in order to be considered a full-time employee. The number of hours that must be worked for an employee to be considered full-time is determined in a manner consistent with the employer's general employment practices (but cannot be more than eight hours a day or 40 hours a week).

• Thus, if the employer had 20 or more total employees on at least 50% of typical business days during last year, then they’d be subject to COBRA as of Jan 1, even if the plan year begins on September 1.