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COBRA Continuation Coverage

Federal COBRA

The consolidated omnibus budget reconciliation act (COBRA) is a federal program that provides temporary continuation of health insurance when employer-sponsored coverage is lost. Employers with 20+ employees are required to offer COBRA as part of their group health plan. Learn more about COBRA from the US Department of Labor's website.

State Continuation

Some states have developed their own version of continuation coverage. This is sometimes called "mini" COBRA, or in California, Cal-COBRA, and may extend the amount of time required for employers to offer continuation coverage. State continuation  usually applies to employers with fewer than twenty employees.

COBRA Coverage with Gusto

If your health benefits are managed by Gusto, here's what we'll do to help with COBRA:

  • We’ll determine whether your company is subject to federal COBRA or state continuation laws.

  • If you’re subject to state continuation, we’ll send continuation of coverage notices to dismissed employees and help get them enrolled if they choose to take this route.When you dismiss employees, we'll send this notice 3 weekdays after they've been dismissed to let them know their continuation options. If you're using a retroactive date to dismiss the employee, we'll send the notice within 24 hours.

  • If you’re subject to Federal COBRA, we’ll connect you with our partner, BASIC Pacific, and they’ll administer COBRA for dismissed employees.

Note: Administration assistance for state continuation and COBRA comes at no additional cost to the company.

Deadline to enroll:

  • State continuation: In most states, terminated employees have 60 days from the date of lost coverage to enroll.

    • Note: some states may have shorter election windows.

  • COBRA: Terminated employees have 60 days from the date of lost coverage or the date COBRA election notices were received—whichever happens last—to enroll.

Cost: This will vary based on the plan. The employee is responsible for paying 100% of the premium and any additional administration fees, which can be up to 15% of the premium.

Plan Options: Employees are only eligible to enroll in lines of coverage they were actively enrolled in at the time of termination (i.e. if they previously waived dental coverage, they can’t enroll in dental COBRA coverage). However, if they were previously enrolled in more than one line of coverage (i.e. medical & dental) they can choose which lines to continue (i.e. continue medical & drop dental).