When Can An Employer Cancel Cobra Insurance?

COBRA is federally regulated law, not state dependent law. Anyway, when the qualifying event is the covered employee's termination of employment (for reasons other than gross misconduct) or reduction in hours of work, qualified beneficiaries must be provided a maximum of 18 months of continuation coverage.  For all other qualifying events, qualified beneficiaries must be provided 36 months of continuation coverage.

You should note that a group health plan may terminate continuation coverage earlier than the end of the maximum period for any of the following reasons:
● Premiums are not paid in full on a timely basis;
● The employer ceases to maintain any group health plan
● A qualified beneficiary begins coverage under another group
health plan after electing continuation coverage (as long as that plan doesn't impose an exclusion or limitation with respect to a preexisting condition of the qualified beneficiary)
● A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage;
● A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage (such as fraud).

If continuation coverage is terminated early, the plan must provide the qualified beneficiary with an early termination notice.  I hope this helps answer your question.