COBRA requires group health plans sponsored by covered employers to allow qualified beneficiaries to have "COBRA continuation coverage" in the event that they lose group health plan coverage for specified reasons. COBRA applies only to employers who had 20 or more employees on more than 50 percent of typical business days during the prior calendar year. In some situations, insured employees have continuation rights under both federal and state law. In such cases, employees may choose the more favorable law. Under both federal and almost all state laws, continuation requires the insured to pay the full premium (including the former employer's share), but the insured does get the advantage of cheaper group rates.
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Download Now Federal COBRA continuation does not apply to any employer-sponsored group health plan if the employer normally employed fewer than 20 employees during the prior calendar year. An employer is considered to have normally employed fewer than 20 employees during a particular calendar year if it had fewer than 20 employees on at least 50 percent of its typical business days during that year. When counting employees for this purpose, only “common-law employees” are counted. Thus, self-employed individuals, independent contractors, and directors are not counted. Employees of all members of a controlled group are counted, including employees of a foreign member of the controlled group. Part-time employees are also counted as a fractional equivalent of a full-time employee. The fractional equivalent is calculated by dividing the hours that the part-time employee works per week by the number of hours (up to a maximum of 40 per week) that an employee must work in ...