This is the short and sweet name for the Consolidated Omnibus Budget Reconciliation Act of 1986. Now you know why we just call it COBRA. It’s part of Federal ERISA laws, providing continuation of some benefits to employees and dependents losing their group coverage. In general, COBRA allows 18, 29, or 36 months of continued coverage. The employee must pay the full monthly premiums, plus up to an additional 2% in administration fees.
Employers subject to COBRA
COBRA applies to employers who had 20 or more employees during more than 50% of the prior calendar year. If there is common ownership of multiple companies, they all need to be calculated together to make your COBRA determination.
COBRA does not apply to plans sponsored by the Federal government, a church, or certain church-related organizations.
You’ll need to count all your full time and part time employees (including seasonal employees), even if they are not eligible for your benefits or if they are waiving the coverage you offer. Only “common-law” employees are counted – not independent contractors, self-employed persons, and members of the board of directors (unless they are common law employees).
Full time employees are easy – they count as 1. But part time employees only count as a fraction of a full time employee, based on their hours worked.