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Is Cobra Required by Law

July 17, 2017 Overtime 0

Is Cobra Required by Law

COBRA or the ‘Consolidated Omnibus Budget Reconciliation Act of 1985”, is basically a federal law which requires those employing 20 or more than 20 employees and offering healthcare benefits to provide the choice to continue coverage for individuals who could otherwise lose out on these benefits as a result of employment termination, work-hour reduction etc. Each individual state in the U.S. could have its own version of the COBRA law which is applicable to the state employees and employers.

COBRA is incorporated into the plans of all employers in the private sector and also those sponsored by local and state governments.


Healthcare coverage is considered to be among the most crucial benefits offered to employees by their employers. By sponsoring group health plans, employers allow their employees to take care of their own medical needs as well as those of their family. Good health ultimately ensures higher levels of energy and more productive work.

It is mandatory for most of the employer-sponsored group health plans to comply with a federal law termed as the ‘Employee Retirement Income Security Act of 1974’ or ERISA. This law established standards for protecting employee benefits. COBRA is one of the protections part of the ERISA.

COBRA Regulations for Employers

For employers subjected to COBRA and offering a group health plan to their employees, it is mandatory to provide certain benefits to all qualified beneficiaries. An employee is a qualified beneficiary if he/she is given coverage under the group health plan of the employer on a day prior to an event causing coverage loss. It includes all such employees (even part-time employees), their spouses and dependents, retirees (except when they qualify for Medicare) and partners who have signed a partnership agreement.

COBRA need not be offered to an employee who isn’t eligible for the group health plan.