May 2026 Newsletter
Understanding COBRA & Mini-COBRA: What Employers Need to Know
When employees leave their jobs, access to continued health coverage becomes a critical issue. Two key frameworks—federal COBRA and state mini-COBRA laws—govern how this coverage works. Here’s a clear breakdown to help employers stay compliant and informed.
What is COBRA?
Enacted in 1986, COBRA allows employees (and their dependents) to temporarily continue their employer-sponsored health coverage after a qualifying event such as termination or reduction in hours. Coverage is typically available for 18–36 months, but individuals must pay the full premium, including the employer portion.
Federal COBRA vs. Mini-COBRA
Federal COBRA applies to private employers with 20 or more employees
Mini-COBRA laws are state-specific and apply to smaller employers
Think of these as two separate systems:
Federal COBRA governs larger employers
Mini-COBRA fills the gap for smaller businesses, but rules vary by state
Currently, most states (43 + D.C.) have adopted mini-COBRA laws, though requirements differ.
Tennessee Update (Important)
Tennessee employers should be aware of a key legislative change:
Tennessee’s mini-COBRA law had previously been repealed
New legislation has been passed reinstating mini-COBRA
The law will be effective beginning July 1, 2026
This means smaller employers in Tennessee will once again have state continuation coverage obligations, making it especially important to review compliance procedures ahead of the effective date.
Key Differences to Know
· Eligibility thresholds vary by state (e.g., how employees are counted)
· Coverage duration differs widely:
o Some states allow up to 36 months
o Others may limit coverage to just a few months
· States without mini-COBRA rely on the ACA marketplace for coverage options
COBRA vs. ACA Marketplace
Employees often must choose between:
COBRA/Mini-COBRA
- Keeps the same coverage
- More expensive (employee pays full premium + fees)
ACA Marketplace Plans
- May be more affordable depending on income
- Coverage and cost vary by state
There is no one-size-fits-all answer. Employees must evaluate based on their financial situation and coverage needs.
Employer Responsibilities
While insurers handle much of the administration, employers still have important obligations:
- Provide timely and accurate notices of COBRA/mini-COBRA rights
- Coordinate with carriers to ensure proper enrollment and compliance
- Understand state-specific rules, including notice timing and content
Failure to meet notice requirements can create significant liability exposure. COBRA compliance remains one of the most litigated areas in benefits law.
Common Employer Pitfalls
· Missing or delayed COBRA notices
· Incorrect or incomplete notice content
· Failing to remove terminated employees from active coverage
· Overpaying employer contributions for ineligible individuals
Best practice: When in doubt, send the notice.
Looking Ahead
With the expansion of ACA marketplace options, reliance on mini-COBRA has decreased. However, COBRA and mini-COBRA remain critical safeguards, especially as state laws (like Tennessee’s) continue to evolve.
Takeaways for Employers
· Know whether federal COBRA or mini-COBRA applies to your organization
· Prepare now for Tennessee’s July 1, 2026 mini-COBRA reinstatement
· Stay on top of notice requirements and deadlines
· Review state-specific rules carefully
· Coordinate closely with your insurance provider
· Consult legal or compliance counsel when questions arise
If you have questions about COBRA compliance, notice requirements, or state-specific rules, our team is here to help.