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Determining Federal vs. State COBRA

Generally, the COBRA type offered to employees is determined by the number of full-time employees and FTEs in the employees' company.

  • Federal COBRA generally applies to companies with at least 20 full-time employees or full-time equivalents (FTEs) for 50% of the previous calendar year.
  • State COBRA applies to companies with less than 20 full-time employees and FTEs for 50% of the previous calendar year. Companies under state COBRA will also be subject to the COBRA regulations of the state where the company's plans are based and not the location of the employee.

Companies with fewer than 20 full-time employees may still be eligible for federal COBRA depending on the number of and hours worked by part-time employees. Part-time employees are counted as a fraction of a full-time employee, and these fractions must be added to the total count. Assuming full-time employees work 40 hours per week:

  • A part-time employee working 10 hrs/week = 0 .25 FTE (or 1/4 of what a full-time employee works).
  • A part-time employee working 20 hrs/week = 0.5 FTE (or 1/2 of what a full-time employee works).

For help determining whether you company should be classified as Federal or State, please reach out to your broker.

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