The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires employers with 20 or more employees to offer continuation coverage to covered employees, spouses and dependent children when their health coverage would otherwise end due to certain events.
Complying with COBRA is not easy. The law’s requirements are complex and include several mandatory notices and multiple deadlines to follow and administer. Not only must employers be familiar with COBRA’s legal requirements, but they also must ensure they have the necessary procedures in place to administer COBRA coverage properly. Mistakes can easily occur if an employer does not have an effective process in place to administer COBRA coverage and keep track of strict deadlines.
To appropriately administer COBRA coverage, employers must:
- Recognize when COBRA coverage must be offered to a covered employee, spouse and/or dependent child.
- Know when to send COBRA notices.
- Establish reasonable procedures for qualified beneficiaries to provide COBRA-related notices.
- Track important deadlines, including deadlines for paying premiums.
- Provide identical coverage to qualified beneficiaries.
This is no small task, but it is one that employers should prioritize because COBRA mistakes can be costly, even if they are unintentional. Due to the complexities of the law and potentially serious consequences for errors, some employers outsource COBRA administration to a third-party vendor. Even when COBRA administration is outsourced, employers will still be responsible for some important aspects of administering COBRA, such as recognizing when COBRA coverage must be offered to a covered employee, spouse or dependent and providing COBRA enrollees with open enrollment opportunities.
Employers who administer COBRA coverage themselves should periodically review their compliance with COBRA’s requirements to avoid potential penalties and lawsuits and control health care spending. Employers who outsource their COBRA administration should also be familiar with COBRA’s rules so they can monitor their service provider and help employees with basic COBRA questions.
Benefits Toolkit - Employer's Guide to COBRA Administration
This Benefits Toolkit provides a broad overview of COBRA coverage and then outlines the steps to take throughout the administration process.
- COBRA Overview (State Continuation Coverage, Covered Employers, Offering COBRA Coverage, Duration of Coverage, COBRA Premiums, COBRA Notices, COBRA Mistakes)
- Recognize When COBRA Must Be Offered (Qualified Beneficiaries, Qualifying Events)
- Know When to Send COBRA Notices (Maintain Records, General COBRA Notice, COBRA Election Notice, Notice of COBRA Unavailability, Notice of Early Termination)
- Establish Reasonable Notice Procedures (Reasonable Procedures, COBRA Notices)
- Track Important Deadlines (COBRA Elections, Premium Deadlines, Duration of COBRA Coverage)
- Provide Identical Coverage to Qualified Beneficiaries (Enrollment Rights, Plan Disclosures)
COBRA Administration Resources
These helpful resources feature valuable information about COBRA administration, including a flowchart, checklist, and infographic. Speak with Parrott Benefit Group if you have any questions about these resources.
- COBRA Administration Flowchart: This flowchart provides a high-level overview of the steps involved with COBRA administration.
- Complying With COBRA Checklist: Use this checklist as a guide when reviewing your company’s compliance with COBRA.
- COBRA Continuation Coverage Overview: This infographic provides an overview of COBRA continuation coverage.
- COBRA Administration Outsourcing: This article discusses reasons to outsource COBRA administration and factors to consider before you do so.
For more information on COBRA administration, contact Parrott Benefit Group today.
These resources are not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2023 Zywave, Inc. All rights reserved.
