The Consolidated Omnibus Budget Reconciliation Act applies to employers of 20 or more employees, who also provide healthcare benefits. Covered employers must offer and allow continuation of healthcare benefits when a qualifying event occurs. Qualifying events include employment termination, divorce, the death of the employee, and a few other circumstances.

However employers are not obligated to offer continuation of coverage when the termination is based on gross misconduct. COBRA coverage requires the employee to pay for the full premium for coverage, as well as a 2% administrative fee if assessed. And COBRA coverage will end if the premiums are not paid as required. The covered individual is eligible for employer sponsored medical insurance, or Medicare coverage, or if the employer terminates the plan. Events that trigger COBRA coverage include employment termination for any reason other than gross misconduct. If the employee’s hours are reduced and the employee is no longer eligible for coverage, the spouse’s death or divorce, or when a dependent child is no longer eligible for coverage.