[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR54.4980B-1]

[Page 282-283]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 54_PENSION EXCISE TAXES--Table of Contents
 
Sec.  54.4980B-1  COBRA in general.

    The COBRA continuation coverage requirements are described in 
general in the following questions-and-answers:
    Q-1: What are the health care continuation coverage requirements 
contained in section 4980B of the Internal Revenue Code and in ERISA?
    A-1: (a) Section 4980B provides generally that a group health plan 
must offer each qualified beneficiary who would otherwise lose coverage 
under the plan as a result of a qualifying event an opportunity to 
elect, within the election period, continuation coverage under the plan. 
The continuation coverage requirements were added to section 162 by the 
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Public 
Law 99-272 (100 Stat. 222), and moved to section 4980B by the Technical 
and Miscellaneous Revenue Act of 1988, Public Law 100-647 (102 Stat. 
3342). Continuation coverage required under section 4980B is referred to 
in Sec. Sec.  54.4980B-1 through 54.4980B-10 as COBRA continuation 
coverage.
    (b) COBRA also added parallel continuation coverage requirements to 
Part 6 of Subtitle B of Title I of the Employee Retirement Income 
Security Act of 1974 (ERISA) (29 U.S.C. 1161-1168), which is 
administered by the U.S. Department of Labor. If a plan does not comply 
with the COBRA continuation coverage requirements, the Internal Revenue 
Code imposes an excise tax on the employer maintaining the plan (or on 
the plan itself), whereas ERISA gives certain parties--including 
qualified beneficiaries who are participants or beneficiaries within the 
meaning of

[[Page 283]]

Title I of ERISA, as well as the Department of Labor--the right to file 
a lawsuit to redress the noncompliance. The rules in Sec. Sec.  
54.4980B-1 through 54.4980B-10 apply for purposes of section 4980B and 
generally also for purposes of the COBRA continuation coverage 
requirements in Title I of ERISA. However, certain provisions of the 
COBRA continuation coverage requirements (such as the definitions of 
group health plan, employee, and employer) are not identical in the 
Internal Revenue Code and Title I of ERISA. In those cases in which the 
statutory language is not identical, the rules in Sec. Sec.  54.4980B-1 
through 54.4980B-10 nonetheless apply to the COBRA continuation coverage 
requirements of Title I of ERISA, except to the extent those rules are 
inconsistent with the statutory language of Title I of ERISA.
    (c) A group health plan that is subject to section 4980B (or the 
parallel provisions under ERISA) is referred to as being subject to 
COBRA. (See Q&A-4 of Sec.  54.4980B-2). A qualified beneficiary can be 
required to pay for COBRA continuation coverage. The term qualified 
beneficiary is defined in Q&A-1 of Sec.  54.4980B-3. The term qualifying 
event is defined in Q&A-1 of Sec.  54.4980B-4. COBRA continuation 
coverage is described in Sec.  54.4980B-5. The election procedures are 
described in Sec.  54.4980B-6. Duration of COBRA continuation coverage 
is addressed in Sec.  54.4980B-7, and payment for COBRA continuation 
coverage is addressed in Sec.  54.4980B-8. Section 54.4980B-9 contains 
special rules for how COBRA applies in connection with business 
reorganizations and employer withdrawals from a multiemployer plan, and 
Sec.  54.4980B-10 addresses how COBRA applies for individuals who take 
leave under the Family and Medical Leave Act of 1993. Unless the context 
indicates otherwise, any reference in Sec. Sec.  54.4980B-1 through 
54.4980B-10 to COBRA refers to section 4980B (as amended) and to the 
parallel provisions of ERISA.
    Q-2: What standard applies for topics not addressed in Sec. Sec.  
54.4980B-1 through 54.4980B-10?
    A-2: For purposes of section 4980B, for topics relating to the COBRA 
continuation coverage requirements of section 4980B that are not 
addressed in Sec. Sec.  54.4980B-1 through 54.4980B-10 (such as methods 
for calculating the applicable premium), plans and employers must 
operate in good faith compliance with a reasonable interpretation of the 
statutory requirements in section 4980B.

[T.D. 8812, 64 FR 5173, Feb 3, 1999; 64 FR 14382, Mar. 25, 1999, as 
amended by T.D. 8928, 66 FR 1849, Jan. 10, 2001]