Federal Compliance Guide
COBRA administration complete guide
Planlined's guide to COBRA compliance: qualifying events, notification requirements, premium calculations, and timeline management for benefits brokers and employers.
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20+ employees to offer temporary continuation of group health coverage when coverage would otherwise end due to qualifying events.
COBRA applies to group health plans maintained by private-sector employers with 20+ employees and state/local government employers. Federal employees are covered under a similar provision.
The 20-employee line is one of several headcount thresholds that change a group's obligations; small group vs large group walks through the others. People on COBRA must be offered the same open enrollment rights as active employees, so include them in the open enrollment checklist.
State Mini-COBRA Laws
Many states have "mini-COBRA" laws for employers with fewer than 20 employees. Check your state requirements—California, New York, and Texas have specific provisions.
Confirm the event, the plan and the notice dates
Federal COBRA generally applies to private-sector group health plans maintained by employers with at least 20 employees under the applicable prior-year counting rules. State and local government plans have a separate federal administration route through CMS; church and federal-government plans can follow different rules. Start with the Department of Labor employer guide and CMS continuation-coverage questions and answers to confirm the scope.
A listed event must cause a loss of coverage for the relevant beneficiary. Medicare entitlement, an SSA determination and a second qualifying event are not automatic promises of the same extension in every case. Keep the event date, coverage-loss date, notice date and election date as separate fields in the administrator’s record.
The timeline below summarizes common federal deadlines. Plan procedures, particular events and state continuation rules can change the applicable workflow. Use the administrator’s actual notices and plan terms to establish the dates for the person concerned.
COBRA qualifying events
| Qualifying Event | Duration | Eligible Beneficiaries |
|---|---|---|
| Job loss, except gross misconduct, or reduced hours causing coverage loss | Usually up to 18 months | Covered employee, spouse and dependent children |
| Medicare entitlement that causes covered dependents to lose coverage | Up to 36 months; timing matters | Covered spouse and dependent children |
| Divorce or legal separation causing coverage loss | Up to 36 months | Covered spouse and dependent children |
| Death of the covered employee causing coverage loss | Up to 36 months | Covered spouse and dependent children |
| Dependent child loses eligibility under the plan | Up to 36 months | The covered dependent child |
| Qualifying SSA disability determination and timely required notice | Potential 11-month extension, up to 29 total | Qualified beneficiaries in the initial 18-month period |
COBRA notification timeline
Keep a notice and payment record
Record which covered people have independent election rights, who must send each notice, the date it was sent and the applicable delivery evidence. Preserve the election and payment records separately from a broker’s renewal comparison. A first payment can include more than one month because continuation coverage may be retroactive.
The Department of Labor worker guide explains beneficiary election and payment rights. Its time periods are minimum protections, not a reason to shorten a longer period offered by the plan.
COBRA premium calculation
Standard rate
Disability extension rate
Example Calculation
A self-funded or level-funded plan has no carrier premium to start from, so its COBRA rate is set by an actuarial or past-cost method instead. Level-funded plans explained covers how those plans are funded.
Non-compliance penalties
COBRA sits inside a plan's wider ERISA duties. The ERISA compliance checklist covers plan documents, SPDs, Form 5500 and fiduciary duties.
Build the renewal proposal
Planlined helps benefits brokers analyze renewals, compare carrier plans and build branded proposals. It does not administer COBRA or run enrollment.
Primary sources for this checklist
- DOL employer guide: covered plans, qualifying events, notice responsibilities and election periods.
- DOL worker guide: independent election rights, extensions and premium payments.
- CMS COBRA questions and answers: continuation periods, applicable premiums and payment timing.
Frequently asked questions
How long can COBRA continuation coverage last?
Termination or reduced hours usually provides up to 18 months when it causes coverage loss. Qualifying events affecting a spouse or dependent child can provide up to 36 months. An SSA disability determination may extend an initial 18-month period to 29 months if the required conditions and notices are satisfied. Medicare timing and second events can affect the period; confirm the applicable rule with the plan administrator.
How much can a plan charge for COBRA premiums?
A plan can generally charge up to 102% of the full applicable premium, including the employer and employee portions. A qualifying disability extension may allow up to 150% during its additional months. The plan administrator must determine the applicable premium and extension conditions.
What are the COBRA election and first-payment deadlines?
The election period must generally be at least 60 days from the later of coverage loss or the election notice. After election, the plan must allow at least 45 days for the first premium payment. Subsequent monthly payments have at least a 30-day grace period. Track the dates separately rather than counting every deadline from the qualifying event.
What happens if a required COBRA notice is missed?
Missing required notices or coverage can expose the responsible parties to tax, notice and benefit-claim consequences. The applicable rules, exceptions and amounts depend on the circumstances. Use the Department of Labor employer guidance and the plan’s administrator to resolve a missed notice; a fixed penalty estimate is not a substitute for reviewing the event.