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COBRA Continuation Coverage: Basic Information

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 (Mini) COBRA

Some states have developed their own version of continuation coverage. This is often referred to as state or "mini" COBRA and may extend the amount of time required for employers to offer continuation coverage. State COBRA usually applies to employers with less 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 which type of COBRA your company is eligible for. 
  • If you qualify for State COBRA, we’ll send COBRA Election notices to dismissed employees and help get them enrolled if they choose to take this route.
  • If you qualify for Federal COBRA, we’ll connect you with our partner, BASIC Pacific, and they’ll administer COBRA for dismissed employees.
  • When you dismiss employees, we'll send them a COBRA Election notice 3 days 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.

Note: Administration assistance for either type of COBRA comes at no additional cost to the company.

Deadline to enroll: Terminated employees have at least 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 fee the carrier charges, which can be up to 15% of your 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 you previously waived dental coverage, you 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 and/or drop (i.e. continue medical & drop dental).