Health Insurance Continuation Coverage Under COBRA

Publication Date: January 2009

Publisher: Library of Congress. Congressional Research Service


Research Area: Health



Most Americans with private group health insurance are covered through an employer, coverage that is generally provided to active employees and their families. A change in an individual's work or family status can result in loss of coverage. In 1985, Congress enacted legislation to provide temporary access to health insurance for qualified individuals who lose coverage due to such changes. Under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA, P.L. 99-272), an employer with 20 or more employees must provide those employees and their families the option of continuing their coverage under the employer's group health insurance plan in the case of certain events. The coverage, usually for 18 months, can last up to 36 months, depending on the nature of the triggering event. The employer is not required to pay for this coverage; instead, the beneficiary can be required to pay up to 102% of the premium. Employers who fail to provide the continued health insurance option are subject to penalties. The Trade Act of 2002 provided a tax credit for the purchase of health insurance (including COBRA coverage) for workers certified as adversely affected by foreign trade.

In 1987, the Internal Revenue Service issued proposed regulations providing guidance for employers on COBRA. The regulations were finalized in February 1999 and January 2001. Final regulations regarding COBRA notification requirements were issued by the Department of Labor in May 2004.

Some maintain that in requiring employers to provide former employees with the option of continuing their health insurance coverage, COBRA has resulted in extra costs for employers (in the form of increased premiums for employers' group health insurance policies), as well as added administrative burdens. In contrast, others maintain that COBRA should be expanded to include new eligibility categories and longer coverage periods, so that more workers and their families have a source of group health insurance coverage during periods of job or family transitions. They argue that the financial and administrative burdens on employers have been exaggerated.

This report provides background information on continuation health insurance under COBRA and on the COBRA population. It will be updated as events warrant.