COBRA, HIPAA, and Benefits Compliance
18 mo
Standard COBRA
For termination or hours reduction
36 mo
Extended COBRA
For divorce death Medicare dependent aging out
102%
Premium Cost
Employee pays 100% plus 2% admin fee
COBRA Fundamentals
The Consolidated Omnibus Budget Reconciliation Act requires employers with 20+ employees to offer temporary continuation of group health coverage when it would otherwise end due to a qualifying event. The employee pays the full premium.
Gross misconduct is the ONE qualifying event that does NOT trigger COBRA. Every other type of termination, reduction in hours, divorce, death, Medicare enrollment, or dependent aging out of coverage triggers COBRA rights.
Qualifying Events and Periods
18 for job events, 36 for life events| Qualifying Event | Duration | Who Gets Coverage |
|---|---|---|
| Voluntary or involuntary termination | 18 months | Employee and dependents |
| Reduction in hours | 18 months | Employee and dependents |
| Disability (Social Security) | 29 months | Disabled individual |
| Divorce or legal separation | 36 months | Spouse and dependents |
| Death of covered employee | 36 months | Spouse and dependents |
| Dependent child ages out | 36 months | The dependent |
| Employee becomes Medicare eligible | 36 months | Spouse and dependents |
HIPAA and ACA Basics
HIPAA Privacy Rule
Protects individually identifiable health information held by covered entities (health plans, providers, clearinghouses). Note that HIPAA applies to covered entities, not employers directly. Employers who self-insure become a covered entity.
ACA Employer Mandate
Applicable Large Employers (50+ full-time equivalent employees) must offer affordable minimum essential coverage or face penalties. Affordability means the employee contribution for self-only coverage does not exceed a set percentage of household income.
can you match each event to the right COBRA period?
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Practice Benefits QuestionsExam Traps
18 vs 36 months depends on the qualifying event type
Termination and hours reduction trigger 18 months. Life events like divorce, death, Medicare eligibility, and dependent aging out trigger 36 months. The disability extension gets 29 months. The exam will present specific events and ask for the correct continuation period.
The employee pays 102%, not 100%
COBRA allows the employer to charge 100% of the premium plus a 2% administrative fee. The employee receives no employer subsidy. This makes COBRA expensive but it is the law. For disability extensions, the employer can charge up to 150% in months 19 through 29.
Gross misconduct means NO COBRA coverage
This is the one exception the exam loves. If an employee is terminated for gross misconduct, COBRA does not apply. Every other qualifying event triggers COBRA. Gross misconduct is narrowly defined and rarely found, but the exam tests that it is the only disqualifier.
Gross Misconduct
The ONE qualifying event that does NOT trigger COBRA. Fired for gross misconduct = no continuation. Everything else = COBRA applies.
18 and 36
18 months for job events. 36 months for life events. 29 months with disability extension.
You are a trapeze artist (employee) performing under a big tent (employer health plan). As long as you are performing, the tent covers you. When you leave the show, the tent normally goes away.
COBRA is a safety net that catches you after you fall off the trapeze. It lets you keep the same health coverage, but now YOU pay for the entire net yourself, plus a small fee for the crew that maintains it (102%).
The net does not last forever. If you left the show voluntarily or got let go (job event), the net stays for 18 months. If a life event occurred (divorce, death of the performer, a dependent growing up), the net stays for 36 months.
If you got fired for setting the tent on fire (gross misconduct), there is no net at all. That is the only situation where COBRA does not apply.
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