Key Takeaways
- Federal COBRA applies to employers with 20 or more employees, requiring 18-36 months of continuation coverage
- Arizona state continuation applies to employers with fewer than 20 employees, providing similar protections
- COBRA qualifying events include termination of employment, reduction in hours, divorce, and loss of dependent status
- Employees must be notified of COBRA rights within 14 days of the plan administrator learning of a qualifying event
- COBRA coverage can cost up to 102% of the full premium (employer and employee portions plus 2% administrative fee)
Arizona COBRA and State Continuation Rights
COBRA (Consolidated Omnibus Budget Reconciliation Act) and Arizona state continuation laws ensure employees can maintain health coverage after losing group coverage.
Federal COBRA Requirements
Who COBRA Applies To
COBRA applies to:
- Private sector employers with 20 or more employees
- State and local governments
- Church plans with 20+ employees (if elected COBRA coverage)
COBRA Does NOT Apply To
- Employers with fewer than 20 employees
- Federal government (has separate rules)
- Some church plans
Exam Tip: COBRA applies to employers with 20 or more employees. Arizona state continuation covers smaller employers.
Qualifying Events
Events Triggering COBRA Rights
| Qualifying Event | Maximum Coverage Period |
|---|---|
| Termination of employment (not gross misconduct) | 18 months |
| Reduction in hours | 18 months |
| Employee's death | 36 months (dependents) |
| Divorce or legal separation | 36 months (spouse/dependents) |
| Employee becomes Medicare eligible | 36 months (dependents) |
| Child loses dependent status | 36 months (child) |
Extended COBRA Periods
| Situation | Extension |
|---|---|
| Disability determination within 60 days | 29 months total |
| Second qualifying event during initial period | 36 months total |
COBRA Continuation Periods
Standard Periods
| Covered Person | Typical Period |
|---|---|
| Employee | 18 months |
| Spouse (employee death) | 36 months |
| Dependent child losing status | 36 months |
| Divorced spouse | 36 months |
COBRA Notice Requirements
Employer/Plan Administrator Duties
| Requirement | Timeframe |
|---|---|
| Initial COBRA notice | When first covered under plan |
| Qualifying event notice | Within 14 days of learning of event |
| Election notice to beneficiary | Within 14 days of qualifying event notice |
Employee/Beneficiary Duties
| Requirement | Timeframe |
|---|---|
| Notify plan of divorce/separation | Within 60 days |
| Notify plan of child losing status | Within 60 days |
| Elect COBRA coverage | Within 60 days of notice |
| Pay initial premium | Within 45 days of election |
| Pay ongoing premiums | Within 30 days of due date |
COBRA Premiums
Maximum Allowable Premium
| Situation | Maximum Premium |
|---|---|
| Standard COBRA | 102% of full premium |
| Disability extension | 150% for months 19-29 |
The 102% includes:
- Employer's share of premium
- Employee's share of premium
- 2% administrative fee
Exam Tip: COBRA premiums can be up to 102% of the FULL premium (not just the employee portion). This often surprises people who only paid a portion while employed.
Arizona State Continuation
For employers with fewer than 20 employees:
Arizona Mini-COBRA
| Feature | Requirement |
|---|---|
| Applies to | Employers with fewer than 20 employees |
| Duration | Varies by circumstance |
| Premium | Similar to COBRA (102%) |
| Coverage | Same coverage as group plan |
Key Differences from Federal COBRA
| Feature | Federal COBRA | Arizona State |
|---|---|---|
| Employer size | 20+ employees | Fewer than 20 |
| Enforcement | Federal DOL | Arizona DIFI |
| Penalties | Federal penalties | State penalties |
COBRA Termination
COBRA coverage ends when:
Termination Events
| Event | Effect |
|---|---|
| Premium not paid timely | Coverage terminates |
| Maximum period expires | Coverage terminates |
| Employer terminates all group coverage | Coverage terminates |
| Covered person obtains other group coverage | May terminate |
| Covered person becomes Medicare eligible | May terminate |
| Covered person dies | Coverage terminates for that person |
Grace Period for Premium Payments
- Initial premium: 45 days from election
- Subsequent premiums: 30 days from due date
- Late payment within grace period: Coverage continues
- Payment after grace period: Coverage terminates retroactively
Coordination with Other Coverage
Multiple Coverage Options
When COBRA-eligible individuals have options:
| Scenario | Consideration |
|---|---|
| Spouse's employer plan | Compare costs and benefits |
| ACA marketplace | Premium tax credits may apply |
| Medicare | COBRA is secondary to Medicare |
| Medicaid | May be eligible depending on income |
COBRA and Medicare
Important coordination rules:
- Medicare generally becomes primary
- COBRA can supplement Medicare
- Employer cannot require COBRA election over Medicare
- Coverage period may be affected
Producer Responsibilities
When advising clients on COBRA:
Key Counseling Points
- Compare options - COBRA vs. marketplace vs. spouse's plan
- Calculate costs - 102% of full premium
- Consider duration - How long coverage is needed
- Check marketplace - May qualify for subsidies
- Meet deadlines - 60-day election, 45-day initial payment
Exam Tip: Producers should help clients understand all their coverage options when losing group health insurance, including COBRA, state continuation, spouse's coverage, and ACA marketplace options.
What is the minimum employer size for federal COBRA to apply?
What is the maximum premium an employer can charge for COBRA coverage?
How long does a terminated employee have to elect COBRA coverage after receiving notice?
What is the maximum COBRA continuation period for a divorced spouse?
How long is the grace period for ongoing COBRA premium payments?