What is COBRA insurance? Guide for construction HR leaders

Construction companies may scale crews up and down or adjust work hours as projects evolve. A worker may face a layoff when a contract wraps up, or they could experience a reduction in hours that drops them below benefit eligibility. Both scenarios trigger official COBRA events. Because these transitions happen frequently across project lifecycles, construction HR leaders need a strong grasp of how COBRA rules apply to manage benefit cutoffs cleanly.

This guide explains what COBRA insurance is, who qualifies for it and when, and what construction employers must do to stay compliant. It also covers how much COBRA insurance costs laid-off employees so HR leaders can field questions the moment they arise.

What are COBRA benefits?

COBRA is a federal law that lets workers and their immediate families temporarily keep their employer-sponsored health insurance after a major life change like losing a job. Existing plans, networks, and deductibles remain the same. However, the employee is responsible for paying the full COBRA premium. This includes the portion the employer used to cover. 

Some companies may choose to continue paying some or all of these premiums as part of a severance package. But that’s not guaranteed or required. Plan sponsors can explain exactly how much COBRA will cost each worker.

Who qualifies for COBRA coverage, and what triggers it?

Not everyone qualifies for COBRA continuation coverage. To be eligible, an employee must:

• Take part in a plan covered by COBRA: The employer must be a private company or union with at least 20 employees on more than 50% of their usual business days in the previous calendar year. All state and local governments must cover COBRA; however, federal government plans are exempt and instead follow the Federal Employees Health Benefits Act (FEHB).
• Experience a qualifying life event: The employee or covered family member must face a major life change like job loss, reduction in hours, or divorce as a dependent. 
• Already hold coverage: The employee or covered family member must have actively enrolled in that specific health plan and been covered on the day before the qualifying life event happened.

What is a qualifying life event?

Qualifying life events for continued health insurance coverage include:

• Job loss of the covered employee, whether voluntary or involuntary (except in cases of gross misconduct)
• A reduction in work hours for the covered employee
• Divorce or legal separation (for spouses and dependent children)
• Death of the covered employee (for spouses and dependent children)
• Eligibility for Medicare in certain situations (for spouses and dependent children)
• A dependent child aging out of coverage

In construction, reduced work hours often slip by HR teams. When jobs wind down, crews might drop below the plan’s hour threshold even though nobody was laid off. Employees quietly work fewer hours, and HR doesn’t receive any specific paperwork to warn them of the change. That’s why tying hours worked to the correct project is so important; otherwise, employers may trigger COBRA insurance without noticing.

Coverage duration

Standard COBRA coverage duration depends on the specific qualifying life event. Voluntary or involuntary job loss or a reduction of hours triggers 18-month coverage. Events affecting family dependents, like the death of the covered employee or a child aging out of eligibility, triggers 36-month coverage. 

Individuals on an 18-month plan who experience a disability can qualify for an 11-month extension (bringing the total to 29 months) for every family member if they meet these criteria:

• The Social Security Administration (SSA) determines that the qualified beneficiary has a disability before the initial 18-month coverage window reaches its 60th day.
• The disability persists throughout the entire 18-month coverage period.

How does COBRA insurance work for construction employers?

COBRA applies to any private-sector construction employers and employee organizations with at least 20 employees on more than half of their typical business days in the previous calendar year. It also applies to plans sponsored by state and local governments.

Employers, employees, and group health plans all have obligations in the COBRA notice and election process. Here’s how it works.

Notify the group health plan

Employers must notify the plan within 30 days for events like job termination, Medicare start, or company bankruptcy. For events like divorce or a child losing dependent status, responsibility falls to the covered employee or qualified beneficiary.

Send the COBRA election notice

Once notified, the health plan has 14 days to mail an election packet to the beneficiaries. This packet outlines key information like:

• Plan administrator contact info and plan name
• The specific qualifying event and eligible family members
• Available coverage options and duration of coverage
• What happens if the beneficiary declines coverage
• Premium pricing, due dates, and grace periods

Track the employee election window

Qualified beneficiaries have 60 days to decide whether to elect COBRA. The clock starts either from the date of the notice or the date insurance would otherwise end (whichever comes later).

Collect the first payment and ongoing premiums

Beneficiaries get at least 45 days after submitting their election form to make their first payment. Coverage backdates to the original loss date. Each monthly payment includes a 30-day grace period. Missing this window allows the plan to cancel coverage permanently.

What happens if a laid-off employee on COBRA gets rehired?

Hiring seasonal workers or rehiring workers for specific projects can complicate these timelines. As soon as a workers’ new benefits begin, their COBRA plans will likely be cancelled. The existing provider will send workers a notice of early termination that explains the date coverage will end, the reason for cancellation, and any rights employees have for reenrollment with other insurance plans.

How much is COBRA insurance?

Qualified beneficiaries pay the entire COBRA premium themselves. Employers can choose to subsidize it as part of their employee benefits program, but doing so is completely optional.

Plans can charge up to 102% of the total coverage cost: the share the worker used to pay, the share the company used to pay, and a 2% administrative fee. If a beneficiary qualifies for a disability extension, the cap rises to 150% during those extra months.

A real-world cost example

In 2025, the average annual premium for employer-sponsored health insurance was $9,325 for single coverage, a little over $777 a month. Single-coverage workers contributed 16% of the premium on average, leaving 84% for the employer. That comes out to:

Previous worker contribution (16%) = 0.16 × $777 = $124.32 a month

Previous employer contribution (84%) = 0.84 × $777 = $652.68 a month

New COBRA cost (102%) = $777 × 1.02 = $792.54 a month

Switching to COBRA means the employee loses the employer subsidy, increasing monthly health insurance costs by $668.22.

Keep COBRA on track with Miter

COBRA gives workers and their families under eligible group health plans the right to continue their health coverage after qualifying life events like job loss or a reduction in hours. Plans can charge up to 102% of the total cost of providing coverage, paid for by the qualified beneficiary. 

Staying compliant means juggling strict deadlines: 30 days to notify the group health plan, 14 days for the plan administrator to send the election notice, 60 days for the qualified beneficiary to elect coverage, and 45 days for the first premium payment.

Miter Benefits handles the handoff. When a qualifying event is recorded, Miter starts the COBRA process, sends the required notices, and manages the communications from there through its COBRA administration partner, which also collects premiums and remits them to the carrier. The event comes off the payroll and benefits record HR teams already keep, so a layoff or an hours drop doesn’t wait on someone remembering to start the clock.

Frequently asked questions

What does COBRA stand for?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. This 1985 legislation allows eligible employees and their immediate families to temporarily continue healthcare coverage after experiencing a qualifying life event, often a job loss or reduced hours.

What are the alternatives to COBRA coverage?

Employees and their families still have options if their health plan isn’t covered by COBRA or they just want to compare costs, including:

• Enrolling in a new group health plan after finding another employer
• Enrolling in a spouse or parent’s plan (for dependents under 26 years old)
• Enrolling in a plan offered on the Affordable Care Act (ACA) Health Insurance Marketplace during the special enrollment period
• Medicare, Medicaid, or the Children’s Health Insurance Program, if eligible