Glossary

COBRA

A federal law letting workers and families keep their employer's group health coverage for a limited time after a job loss or other qualifying event.

Also called: COBRA continuation coverage, Consolidated Omnibus Budget Reconciliation Act, group health continuation coverage

COBRA, from the Consolidated Omnibus Budget Reconciliation Act of 1985, requires most employer group health plans to offer continuation coverage when a qualifying event would otherwise end it. Qualifying events include termination (other than for gross misconduct), reduced hours, death of the employee, divorce or legal separation, Medicare entitlement and a child aging out. It applies to employers with at least 20 employees on more than half of typical business days in the prior year; many states have "mini-COBRA" laws that reach smaller employers.

Maximum periods are 18 months for termination or reduced hours, 29 months with a disability extension, and 36 months for other events. The person can be charged up to 102% of the plan's cost, or up to 150% during the disability extension. The employer notifies the plan administrator, who sends an election notice. The person then has 60 days to elect and 45 days after electing to pay the first premium.

For employers the risk is compliance: late or missing notices create statutory penalties and lawsuits, and a terminated worker's uncovered claims can land on the company. Many firms hand the administration to a third-party administrator or their benefits vendor. See the guide on COBRA continuation coverage: what employers must do for the notice timeline and cost math, and ERISA for the larger framework.

Last reviewed October 10, 2026

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Related terms

Applicable large employer (ALE) Under the ACA, an employer with an average of 50 or more full-time and full-time-equivalent employees in the prior year, subject to the employer mandate. Full-time equivalent (FTE) A way to convert part-time hours into the number of full-time workers they equal, used to decide whether the ACA employer mandate or a tax credit applies. ERISA The 1974 federal law setting fiduciary, reporting and disclosure standards for private-sector retirement and welfare benefit plans, enforced by the DOL. Third-party administrator (TPA) An outside firm hired to run claims and administration for a self-funded plan, captive or self-insured program without taking on the insurance risk.

Related guides

The ACA employer mandate: who must offer coverage and the 2026 penalties Who is an applicable large employer, what coverage avoids the 4980H penalties, and the 2026 figures: 9.96% affordability, $3,340 and $5,010. Benefits for part-time and seasonal workers: ACA and eligibility rules When part-time, seasonal and variable-hour employees count under the ACA employer mandate, how look-back measurement works, and what else you must offer them. COBRA continuation coverage: what employers must do Which employers COBRA covers, notice and election deadlines, the 102% premium cap, coverage periods, penalties and how state mini-COBRA laws fill the gap. Employee assistance programs (EAPs): what they cover and how to buy one How EAPs work for small and mid-sized employers, what the standard services are, when an EAP counts as an excepted benefit, and how to evaluate a vendor. Employee benefits liability coverage: insuring HR administration errors Employee benefits liability pays when an HR administration error leaves an employee uncovered. What it covers, excludes, and how it differs from fiduciary. ERISA basics for small employers: what the law requires of your benefit plans What ERISA requires of employers with health, life and disability plans: documents, notices, fiduciary duties, bonding and 2026 penalty amounts.