COBRA Coverage Explained: What Employees and Employers Need to Know

James P. Berg • April 27, 2026


Losing a job or experiencing a change in employment status can be stressful, particularly when it impacts health insurance coverage. The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) provides a critical safety net by allowing employees and their families to continue employer-sponsored health coverage under certain circumstances.


What Plans Are Covered by COBRA?


COBRA applies to group health plans sponsored by:

  • Private-sector employers; and
  • State and local government employers


To qualify, the employer must have at least 20 employees on more than 50% of its typical business days during the prior calendar year. If this threshold is met and the employer offers a group health plan, COBRA likely applies.


Step 1: What is a “Qualifying Event”?


COBRA coverage is triggered by a qualifying event, a specific change in circumstances that would otherwise cause a loss of health coverage.


For Employees

A qualifying event includes:

  • Termination of employment (for any reason other than “gross misconduct”), or
  • Reduction in hours


These events generally entitle the employee to up to 18 months of continued coverage.


For Spouses & Dependent Children

Additional qualifying events include:

  • Termination or reduction in hours of the employee
  • The employee becoming entitled to Medicare
  • Divorce or legal separation
  • Death of the employee


For Dependent Children

  • Loss of dependent status under the plan (e.g., aging out at age 26 under the Affordable Care Act)


Step 2: Notice of the Qualifying Event


COBRA is a notice-driven statute, meaning rights are triggered only after proper notice is provided.

  • The employer must notify the plan within 30 days if the qualifying event is:
  • Termination or reduction in hours
  • Death of the employee
  • Medicare eligibility
  • Employer bankruptcy
  • The employee or qualified beneficiary must notify the plan if the event is:
  • Divorce or legal separation
  • Loss of dependent child status


Importantly, the plan has no obligation to act until it receives proper notice.


Step 3: COBRA Election Notice


Once the plan receives notice of a qualifying event, it must send a COBRA Election Notice within 14 days.

This notice must clearly explain:

  • The right to continue coverage
  • How to elect COBRA
  • Deadlines and costs
  • Contact information for the plan administrator


If coverage is denied, the plan must issue a written notice of unavailability within 14 days, explaining the reason for denial.


Step 4: Electing COBRA Coverage


After receiving the election notice, the individual has at least 60 days to decide whether to elect COBRA coverage.



The 60-day period runs from the later of:

  • The date the election notice is provided; or
  • The date coverage would otherwise be lost


If elected, coverage is typically retroactive to the date of loss, ensuring no gap in insurance.


Documentation Matters


COBRA rights and procedures must be outlined in the plan’s Summary Plan Description (SPD), a written document employers are required to provide to participants. Both employers and employees should be familiar with this document, as it governs how COBRA operates in practice.


If you have questions regarding COBRA rights and procedures, contact James Berg at jberg@lavellelaw.com or 312-888-4115 to schedule a consultation. 

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