What Is COBRA and When Do Employers Have to Offer It?

Picture this: a longtime employee gives her notice on a Friday afternoon, and by Monday morning HR needs to figure out what happens to her health insurance. That single moment is exactly when COBRA becomes relevant, and getting it wrong can cost a business real money and real legal exposure. If you run payroll or HR for a company with more than a handful of employees, COBRA compliance isn’t optional. It’s federal law with hard deadlines attached.

This guide breaks down what a COBRA qualifying event actually is, which employers have to offer coverage, how fast you have to move once an event happens, and how long that coverage lasts. Whether you’re building your first HR compliance calendar or just double checking an existing process, here’s what the Department of Labor says.

Last updated: August 2026.

What Is COBRA, Exactly?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a federal law that gives employees and their families the right to keep their employer sponsored group health coverage for a limited time after certain life events would otherwise end it.

Here’s the trade-off: the coverage doesn’t come free. Qualified beneficiaries typically pay the full premium themselves, including the share an employer used to cover, plus a 2 percent administrative fee, according to the U.S. Department of Labor. That is often a steep jump from what an active employee pays out of each paycheck. It still beats losing coverage entirely while searching for a new job or a new plan.

COBRA doesn’t create new benefits. It simply extends the same plan someone already had, at their own expense, for a defined stretch of time.

Which Employers Have to Offer COBRA?

Not every business has to comply. Federal COBRA applies to private-sector employers and employee organizations, such as unions, with 20 or more employees during the prior calendar year, per the Department of Labor. Most state and local government employers are covered as well.

That 20-employee count generally includes both full-time and part-time workers, calculated using a formula that converts part-time hours into full-time equivalents. Smaller companies below that threshold aren’t subject to federal COBRA. That said, many states have their own “mini-COBRA” laws that apply to smaller employers, so it is worth checking your state’s rules if headcount puts you near the line.

Church-related organizations and the federal government are excluded from COBRA under federal law.

What Counts as a COBRA Qualifying Event?

A qualifying event is any life change that would otherwise end someone’s group health coverage. When one of these happens, COBRA rights kick in, whether anyone remembers to think about it that day or not.

According to the Department of Labor, the qualifying events that can trigger COBRA include:

• Voluntary or involuntary termination of employment, for reasons other than gross misconduct
• A reduction in work hours that drops someone below the plan’s eligibility requirement
• Divorce or legal separation from the covered employee
• Death of the covered employee
• Loss of dependent status, such as a child aging out of plan eligibility
• The covered employee becoming entitled to Medicare

Notice the pattern. Some of these events are employer-driven, like a layoff or a schedule cut. Others are personal, like a divorce a company might not even know about right away. That difference matters when it comes to who is responsible for reporting it, which is exactly where notice requirements come in.

What Are the COBRA Notice Requirements and Deadlines?

COBRA runs on a strict notice chain. Miss a step and it can turn into a compliance problem fast.

For employer-driven events, meaning termination, reduced hours, the employee’s death, or Medicare entitlement, the employer is responsible for notifying the plan administrator. For events an employer might not learn about on its own, such as a divorce or a dependent aging off the plan, the employee or qualified beneficiary has 60 days to notify the plan directly, according to the Department of Labor.

Once the plan administrator is on notice, the clock really starts moving. Per the Department of Labor, the plan must send the COBRA election notice within 44 days after the qualifying event, or within 14 days after being notified of the event, depending on which timeline applies. That’s not much runway if your process depends on someone remembering to update a spreadsheet.

This is exactly the kind of deadline that good benefits administration software is built to catch. When termination and hours data flow automatically into your benefits system, the countdown starts the moment it happens, not whenever someone gets around to entering it.

The 60-Day COBRA Election Window

Getting the notice out is only half the process. Once a qualified beneficiary receives the COBRA election notice, they have 60 days to decide whether to elect coverage, counting from either the date coverage would otherwise end or the date the notice was provided, whichever is later, per the Department of Labor.

Sixty days sounds generous until you’re the one waiting on someone’s decision. Some people elect coverage right away. Others wait until they actually need care, since COBRA coverage, once elected, applies retroactively back to the date the prior coverage ended. Either way, the employer’s job is finished once a compliant notice goes out on time. What happens after that is the beneficiary’s call.

How Long Does COBRA Coverage Last?

COBRA coverage isn’t indefinite, and how long it runs depends on which qualifying event triggered it in the first place.

For termination of employment or a reduction in hours, coverage generally lasts up to 18 months, according to the Department of Labor. If the qualified beneficiary is determined disabled under Social Security rules, that period can extend to 29 months total.

Other qualifying events stretch that window further. Divorce, the death of the covered employee, a dependent losing eligibility, or the employee becoming entitled to Medicare can let affected spouses and dependents keep coverage for up to 36 months.

Coverage can also end earlier than the maximum period in certain situations. Per the Department of Labor, that includes when premiums are not paid on time, when the employer stops offering any group health plan altogether, when the beneficiary gains other group coverage, or when they become entitled to Medicare after already electing COBRA. You don’t want to track that from memory. It belongs in a documented HR compliance process.

Keeping COBRA Compliance Off Your Plate

Here’s the reality: COBRA is one deadline among dozens that HR teams juggle every week. Miss a single notice window and you’re not just risking an unhappy former employee. You’re risking a federal compliance issue.

That’s where having the right systems in place makes a real difference. HR software that flags terminations, hours changes, and qualifying life events as they happen gives your team a real head start on the 44-day clock instead of a scramble at the end of it.

None of this replaces legal advice for your specific plan and situation. It does mean fewer surprises when a qualifying event lands on your desk.

Frequently Asked Questions

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. COBRA requirements can be complex and vary based on plan type and specific circumstances. Consult an employment attorney or benefits advisor to confirm how these rules apply to your business. Netchex does not provide legal, tax, or accounting advice.

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