COBRA: US

This COBRA policy explains how continuation coverage works when an employee or dependent would otherwise lose group health plan coverage due to a qualifying event, and it's designed to support compliance with the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) requirements in the Internal Revenue Code (26 U.S.C. § 4980B) and ERISA (29 U.S.C. §§ 1161-1169). It also helps your organization set clear, employee-friendly expectations about eligibility, election notices and deadlines, premium payments, and how long coverage can last, while leaving the legal details to the governing plan documents and applicable law.

The History Behind COBRA Policies in the US

COBRA became a must-know in Benefits & Perks after Congress decided that losing a job should not automatically mean losing health coverage that same day. The Consolidated Omnibus Budget Reconciliation Act of 1985 added continuation coverage rules to ERISA (29 U.S.C. §§ 1161-1169) and backed them up with tax penalties in the Internal Revenue Code (26 U.S.C. § 4980B). Employers with group health plans suddenly had to offer qualified beneficiaries a time-limited chance to stay on the plan after certain life and work events.

The early years of COBRA were messy because the statute was technical and the stakes were personal. Courts and regulators spent years answering practical questions that the law left open, like what counts as a qualifying event, who's a qualified beneficiary, and what a compliant election notice looks like. The Supreme Court weighed in on one of the biggest pressure points in Geissal v. Moore Medical Corp. (1998) and rejected an employer's attempt to deny COBRA because the employee already had other group health coverage, which pushed employers toward cleaner, more standardized administration.

Employers started treating a written COBRA policy as a baseline best practice because the risk profile is unforgiving. A missed notice, a mis-timed termination date, or a sloppy handoff to a vendor can trigger excise taxes under 26 U.S.C. § 4980B, ERISA claims, and real-world employee harm. That combination drove the modern playbook: tight timelines, templated notices, and clear internal roles, even when a third-party administrator runs the day-to-day process.

Which Law is a COBRA Policy Meant to Comply With?

If you create and distribute a COBRA Policy for your US-based employees, it's in an effort to comply with the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), as codified in ERISA (29 U.S.C. 1161 et seq.) and the related Internal Revenue Code COBRA excise tax rules (26 U.S.C. 4980B).

How to Write a US-Specific COBRA Policy

• Start with "why" and introduce the concept, COBRA can let employees and covered dependents keep certain benefits after a qualifying event.
• Describe what benefits can be continued and that the continued coverage generally matches what active employees can elect.
• Explain the cost responsibility, the individual pays the full premium and any permitted administrative fee.
• State that eligible individuals will receive an election notice that explains rights and choices.
• Explain that continuation requires making an election and paying premiums on an ongoing basis, and that nonpayment can end coverage.
• List the main qualifying events beyond job separation that can trigger COBRA eligibility.
• Tell employees where to go with questions and where to find plan details (for example, HR and the Summary Plan Descriptions).
• Add a plain-language disclaimer that the summary is informational and that plan documents and applicable law control.

When to Include this Policy in Your Employee Handbook

The law does not require you to publish a policy or issue a specific notice in your handbook. That said, you still have to comply with the requirements that apply to you as an employer. 

You can comply without putting this in your handbook or otherwise publishing it to employees, but including it usually pays off. A short policy helps employees find answers without a ticket to HR, and it helps supervisors handle situations the same way across teams. If you're intentionally keeping your handbook lean, this can live in another easy-to-find policy hub, but make sure employees can actually access it and managers know where to point people. 

Other Considerations

The law applies to US employers who have at least 20 employees working in the US.

Exceptions

None.