Scenario

Effective January 1, 2025 an employer's fully insured group health plan is with carrier A and is required to offer Federal COBRA because they had 20+ employees for 50% of 2024. Currently there are 3 COBRA continuants with Qualifying Event dates within the last 12 months.

The employer is moving to carrier B effective January 1, 2026 and the group had less than 20 employees for 50% of 2025 and will be signing the carrier's Employer Application as 'state continuation eligible'.

Question

As of January 1, 2026 is carrier B required to continue the Federal COBRA status (group billed premium + 2% admin) for the 3 active continuants or will the new carrier transition the three active continuants to state continuation coverage?

Answer

Any beneficiaries that elected COBRA prior to 1/1/2026 will continue to be subject to Federal COBRA even though the employer will be subject to state continuation effective 1/1/2026.

Some carriers have the capability to continue to administer Federal COBRA for the employer, so the employer should check to see if the carrier they are moving to effective 1/1/2026 is capable of taking on the three Federal COBRA beneficiaries; otherwise, the employer will need to continue to administer COBRA for these individuals until they either end their COBRA coverage early, or exhaust their rights under Federal COBRA.

More Information

• Federal-COBRA information in Amwins Benefits Compliance Library
• State Continuation information in Amwins Benefits Compliance Library

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