Maryland Life and Health Insurance License Practice Exam

How many employees must an employer have for a terminated employee to be eligible for COBRA coverage?

1. 5 employees

2. 10 employees

3. 20 employees

4. 50 employees

The correct answer is: 20 employees

The correct response is based on the provisions set forth by the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA mandates that employers who have 20 or more employees must offer continuation of group health insurance coverage to employees and their families who might otherwise lose their coverage due to certain qualifying events, such as job termination. This requirement establishes that only employers with a minimum of 20 employees are obligated under federal law to provide COBRA coverage options. It's important to note that COBRA regulations apply to both private sector employers and state and local governments, but they only come into effect after the employer meets the threshold of 20 employees. Options indicating a lower number of employees are not compliant with COBRA's stipulations, as they do not account for the designations and protections that are specifically tied to the 20-employee threshold. Therefore, the selection of 20 employees as the standard for COBRA eligibility accurately reflects the legal requirements governing the continuation of health insurance benefits in this context.