An Employer'S Guide To Group Health Continuation Coverage Under Cobra - Employee Benefits Security Administration - U.s. Department Of Labor Page 6
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19Life insurance is not considered “medical care,” nor are disability benefits. COBRA does not cover plans that provide only
life insurance or disability benefits.
Group health plans covered by COBRA that are sponsored by private-sector employers are generally welfare plans under
ERISA and therefore subject to ERISA’s other requirements. Under ERISA, group health plans must be administered
by a plan administrator, who is usually named in the plan documents. Many group health plans are administered by the
employer that sponsors the plan, but group health plans are also frequently administered, in whole or in part, by another
individual or organization separate from the employer, such as a professional benefits administration firm. Carrying out
the requirements of COBRA is the direct responsibility of the plan administrator.
Alternatives to COBRA Continuation Coverage
Those entitled to elect COBRA continuation coverage may have alternatives for coverage that may be more affordable
or more generous. One option may be “special enrollment” in other group health coverage. Under the Health Insurance
Portability and Accountability Act (HIPAA), upon certain events, group health plans and health insurance issuers are
required to provide a special enrollment period during which individuals who previously declined coverage for themselves
and their dependents, and who are otherwise eligible, may be allowed to enroll without having to wait until the next open
season for enrollment. One event that triggers special enrollment is an employee or dependent of an employee losing
eligibility for other health coverage. For example, an employee who loses group health coverage may be able to special
enroll in a spouse’s health plan. The employee or dependent must request special enrollment within 30 days of the loss of
other coverage.
Losing employment-based health coverage also gives the employee an opportunity to enroll in the Health Insurance
Marketplace (Marketplace) that serves the state in which the employee resides. The Marketplace offers “one-stop
shopping” for individuals and small businesses to find and compare private health insurance options. Through the
Marketplace, individuals may be eligible for cost-sharing reductions and a tax credit that lowers monthly premiums.
Being offered COBRA continuation coverage does not limit eligibility for coverage or for a tax credit through the
Marketplace. The employee or dependent must select Marketplace coverage within 60 days before or 60 days after the
loss of other coverage, or will have to wait until the next open enrollment period.
Through the Marketplace, individuals also can determine whether they or their dependents qualify for free or low-cost
coverage from Medicaid or the Children’s Health Insurance Program (CHIP). Eligible individuals can apply for and enroll
in Medicaid and CHIP at any time. For more information about the Marketplace, including information about Medicaid or
CHIP eligibility, visit HealthCare.gov.
If an employee or dependent chooses to elect COBRA, the employee or dependent will have another opportunity to
request special enrollment in another group health plan or the Marketplace once COBRA is exhausted. In order to
exhaust COBRA coverage, the individual must receive the maximum period of COBRA coverage available without early
termination. An individual must request special enrollment within 30 days of the loss of COBRA coverage for coverage
through another group health plan or select a plan within 60 days before or 60 days after the loss of COBRA coverage,
for coverage through a Marketplace plan. If an employee or dependent chooses to terminate COBRA coverage early
with no special enrollment opportunity at that time, they will have to wait to enroll in other coverage until the next open
enrollment period for another group health plan or the Marketplace.
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UNITED STATES DEPARTMENT OF LABOR
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