360 / Are all employers subject to COBRA continuation coverage requirements?

Church plans, as defined in IRC Section 414(e), governmental plans, as defined in IRC Section 414(d), and small-employer plans generally are not subject to COBRA continuation coverage requirements, although there are temporary rules applicable to small employers under the American Recovery and Reinvestment Act of 2009 (“ARRA”).¹ ARRA provided a temporary premium subsidy for COBRA continuation coverage for certain unemployed workers ( Q 356) and also applied to small employers if health care continuation coverage was required by a state.²

A small-employer plan is defined as a group health plan maintained by an employer that normally employed fewer than 20 employees during the preceding calendar year on a typical business day.³ Under final regulations, an employer is considered to have employed fewer than 20 employees during a calendar year if it had fewer than 20 employees on at least 50 percent of its typical business days during that year. Only common law employees are taken into account for purposes of the small-employer exception. Self-employed individuals, independent contractors, and directors are not counted. In the case of a multiemployer plan, a small-employer plan is a group health plan under which each of the employers contributing to the plan for a calendar year normally employed fewer than 20 employees during the preceding calendar year.⁴

1.     IRC § 4980B(d).

2.     Section 3001(a)(10)(B) of ARRA 2009.