Consolidated Omnibus Budget Reconciliation Act – COBRA

Frequently Asked Questions

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. Under COBRA, workers and their families must be offered continued health coverage when their regular health plans are discontinued due to such events as voluntary or involuntary termination or reduction of work hours, employee death or divorce (otherwise known as qualifying events). It is the responsibility of the employer to notify employees of their rights under COBRA or face financial and/or legal fines.

An employee covered by a group health plan on the day before a qualifying event who is either an employee, the employee’s spouse, or an employee’s dependent child. In some cases a retiree, their spouse and dependent children can also be qualified beneficiary’s. In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is considered a qualified beneficiary.

A certain event that would cause an individual to lose health coverage. The following lists specific qualifying events:

  • termination of employment for reasons other than gross misconduct
  • death of the covered employee
  • divorce or legal separation
  • covered employee becomes eligible for Medicare
  • loss of dependent child status under the plan rules

The Qualifying Event will determine who the Qualified Beneficiaries are and the amount of time that a plan must offer the health coverage to them under COBRA. Generally speaking, qualified beneficiaries are covered for the following period of time:

  • Termination of Employment: 18 months
  • Reduction in work hours: 18 months
  • Employee Death: 36 months
  • Divorce or Legal Separation: 36 months
  • Dependent Child Ceasing to be a dependant: 36 months

COBRA is applicable to any company that employs 20 or more individuals on more than 50% of its typical business days in the preceding year and offers group health plans. These health plans include: medical, dental vision, prescription drug, and medical reimbursement flexible spending plans.

Companies can be audited by the Internal Revenue Service where the burden of compliance is placed upon the employer. COBRA regulations are enforced through a joint effort by the IRS, US Department of Labor and Department of Health and Human Services. Violations resulting from non-compliance include non-deductible excise tax penalties of $100 per individual affected per day. Statutory fines of up to $110 per day can also be imposed under ERISA (Employee Retirement Income Security Act). Civil lawsuits and attorney’s fees on top of all of this can really add up to substantial penalties for a company.

COBRA is an option of continuing the exact healthcare coverage that you had when you were at your former employer but without employer contributions.  You must pay the full amount of the coverage instead of your former employer paying a substantial portion of the premium.

COBRA is just an option; you can also look for individual coverage or get coverage through the Marketplace at or call 1-800-318-2596.

We do not have online elections currently. To process the COBRA election electronically, please email the COBRA election form to or fax to 484-661-4778. You will need to call us to process your initial payment via Visa and MasterCard; please note there is a 2.75% bank fee.

Your insurance coverage will remain the same for coverages that are COBRA eligible, and you do not need a new ID card. COBRA coverage is an exact continuation of the coverage that you had with your former employer, you will use the same ID cards and same ID information.

One we receive your signed COBRA election form and your full initial payment we will request reinstatement of your COBRA coverage. A normal reinstatement usually takes about 5 to 7 business days, please take mail processing time into consideration when requesting reinstatement.

Once your signed COBRA election form and full initial payment is received, it usually takes about 5 to 7 business days for a normal COBRA reinstatement to be processed.

Once your coverage is reinstated, it will be effective retroactively back to your first day of COBRA so you will not have any gaps in your coverage. Please tell any health care providers that you are in the process of electing COBRA, and it will take several days to be updated in all systems. If necessary, you can pay out of pocket for services and then once the coverage is showing active, you can have the claims resubmitted (please note, requirements vary by carrier, so please contact your carrier directly if you need to resubmit a claim).

If you need a prescription, you can pay out of pocket and then go back to your pharmacy within 7 to 10 days and ask them to process a “return/ exchange” to process a refund (most large pharmacies). If you cannot pay for a prescription out of pocket, depending on what the medication is, the pharmacy might be able to give you a few days’ supply to hold you over. You will need to check with the pharmacy directly.