Category Personnel/Employment
Title What is COBRA? Does COBRA apply to Christian Schools?
Preview What is COBRA? Does COBRA apply to Christian Schools?

What is COBRA?
Does COBRA apply to Christian Schools?
Updated 2018

COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. Under this federal act, employer-provided group health insurance plans must allow employees or their beneficiaries the opportunity to continue to participate in a health plan when there is a job change via resignation or termination or a change in marital status.

To decide whether or not COBRA covers a Christian school, the school must first determine its organizational structure. For example, a Christians school that is operated as an integrated auxiliary and ministry of a church and is not separately incorporated from the church is a Category I school. Category II schools are those Christian schools owned, operated, and controlled by a church, association, or association of churches, but are separately incorporated. A Category III school is one that is completely independent, lay-board operated and controlled.

The requirements of COBRA are applicable to Category III schools, but not to schools in Category I or Category II. The statute provides that schools that share a common religious bond and conviction with the church, convention, or association of churches are exempt. While Category I and II schools are not required to comply with COBRA's requirements, there is nothing in the statute preventing such schools from voluntarily complying. For instance, a teacher may seek a leave of absence for a year for the birth of her baby. The school could allow her to continue her health benefits during that year's absence.

The second aspect of the question of coverage, however, deals with the number of employees the school has. If a Category III school has fewer than twenty employees on a typical business day, it is not covered by COBRA. The number of employees would include both part and full-time workers. Each part-time employee counts as a fraction on an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full-time.

Qualifying Events

Qualifying events are certain events that would cause an individual to lose health coverage. The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health coverage to them under COBRA. A plan, at its discretion, may provide longer periods of continuation coverage.

The qualifying events for employees are:

  • Voluntary or involuntary termination of employment for reasons other than gross misconduct
  • Reduction in the number of hours of employment

The qualifying events for spouses are:

  • Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee
  • Covered employee's becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

The qualifying events for dependent children are the same as for the spouse with one addition:

  • Loss of dependent child status under the plan rule

What benefits must be covered?

Qualified beneficiaries must be offered coverage identical to that available to similarly situated beneficiaries who are not receiving COBRA coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation coverage). A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. Qualified beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.

Who pays for COBRA coverage?

Beneficiaries may be required to pay for COBRA coverage. The premium cannot exceed 102 percent of the cost to the plan for similarly situated individuals who have not incurred a qualifying event, including both the portion paid by employees and any portion paid by the employer before the qualifying event, plus 2 percent for administrative costs. They may make payments on a monthly basis.

What is the duration of coverage?

COBRA requires that continuation coverage extend from the date of the qualifying even for a limited period of time of 18 or 36 months. The length of time for which continuation coverage must be available (the "maximum period" of continuation coverage) depends on the type of qualifying event that gave rise to the COBRA rights. A plan, however, may provide longer periods of coverage beyond the maximum period required by law.

When the qualifying event is the covered employees termination of employment (for reasons other than gross misconduct) or reduction in hours of work, qualified beneficiaries must be provided 18 months of continuation coverage.

When the qualifying event is the end of employment of reduction of the employee's hours, and the employee became entitled to Medicare less than 18 months before the qualifying event, COBRA coverage for the employee's spouse and dependents can last until 36 months after the date the employee becomes entitled to Medicare. For example, if a covered employee becomes entitled to Medicare 8 months before the date his/her employment ends (termination of employment is the COBRA qualifying event), COBRA coverage for his/her spouse and children would last 28 months (36 months minus 8 months).

For all other qualifying events, qualified beneficiaries must be provided 36 months of continuation coverage.

Additional Resources:    

Parts of this article were originally written by Attorney John L. Cooley.  

Notice: This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It has been provided to member schools with the understanding that ACSI is not engaged in rendering legal, accounting, tax, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Laws vary by jurisdiction, and the specific application of laws to particular facts requires the advice of an attorney.  

Association of Christian Schools International
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Phone: 719.528.6906  

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