Managing COBRA can feel like navigating a labyrinth of requirements, deadlines, and responsibilities. However, as an employer, understanding your COBRA obligations is non-negotiable—it’s essential for compliance and maintaining a positive relationship with employees during transitional periods.
What is COBRA, and Why Does It Matter for Employers?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires employers to offer temporary continuation of health coverage to employees (and their families) who would otherwise lose coverage during the lapse period caused by certain qualifying events.
For employers, COBRA ensures compliance with federal mandates and protects employees’ access to critical health benefits during transitional periods like job loss, reduced work hours, or qualifying events like the birth of a child.
COBRA Requirements for Employers: What You Need to Know
Not all employers are required to provide COBRA coverage, but if your business falls under the guidelines, here’s what you need to know:
Employer Eligibility
- COBRA applies to private-sector employers with 20 or more employees, including part-time workers who are counted on a pro-rata basis.
- State-specific “mini-COBRA” laws may apply to smaller employers.
Qualifying Events
Employers must provide COBRA coverage for employees and their dependents who lose group health benefits due to:
- Voluntary or involuntary job loss (excluding gross misconduct).
- Reduced work hours.
- Divorce or legal separation.
- The employee’s death.
- Dependent children aging out of coverage.
Notification Responsibilities
Employers are required to:
- Provide an initial COBRA rights notice to employees when they first enroll in group health coverage.
- Send a qualifying event notice within 14 days of being notified about the event.
- Issue ongoing notifications to COBRA participants, such as reminders about premium payments, coverage changes, or approaching end-of-coverage dates, to ensure clarity while on COBRA insurance.
Coverage Periods
COBRA allows for:
- 18 months of coverage for job loss or reduced hours.
- Up to 36 months for other qualifying events, like divorce or death.
COBRA Regulations for Employers: Stay Compliant
To avoid Failure to comply with COBRA regulations, here’s how to stay on top of your obligations:
Timely Notices
Meet all notification deadlines to ensure former employees and their dependents are informed of their rights.
Accurate Recordkeeping
Maintain detailed records of COBRA communications, payments, and compliance activities to avoid disputes and/or audits.
Monitor Premium Payments
Employers can charge up to 102% of the premium cost, including a 2% administrative fee. Ensure payments are tracked accurately to avoid lapses.
Stay Updated on Regulations
COBRA regulations can change, especially with updates to healthcare laws. Regularly review compliance requirements or partner with a trusted partner like Sterling Administration to stay updated on possible healthcare law changes.
