Simplify COBRA Administration and Avoid the Risk of Penalties

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, a federal law that allows qualified beneficiaries to continue group health coverage after specific life events. These events include job loss (except for gross misconduct), reduction in hours of employment, legal separation, divorce, death of the covered employee or a dependent child aging out of a parent’s plan. COBRA applies to employers with 20 or more employees offering group health insurance.

Under COBRA, former employees, retirees, spouses and dependents may elect COBRA and maintain their previous health plan coverage for a limited time, typically 18 to 36 months, depending on the qualifying event. COBRA coverage is not free; qualified beneficiaries must pay the full monthly premium plus a 2% administrative fee. State laws may offer additional options through mini-COBRA programs for smaller employers.

COBRA administration refers to the process of managing COBRA compliance for group health plans as required by the federal government. This includes tracking COBRA eligibility, sending required notices to qualified beneficiaries, managing enrollment and coverage options and collecting COBRA premiums. COBRA administration ensures that former employees and eligible family members can access continuation health coverage after qualifying events.

Employers or third-party administrators handle tasks like monitoring due dates, calculating insurance premiums and providing information on COBRA rights and benefit plans. The plan administrator must meet federal COBRA requirements, including accurate communication and documentation related to health insurance coverage, open enrollment and plan changes.

COBRA applies to private-sector employers with 20 or more employees that offer a group health plan. This also includes state and local governments, but not plans sponsored by the federal government or certain church-related organizations. These employers must offer COBRA insurance to qualified beneficiaries after specific life events that would otherwise cause a loss of health benefits.

Eligible individuals include former employees, spouses and dependent children who were covered under the group health plan. Qualifying events include voluntary or involuntary job loss (not due to gross misconduct), reduction in work hours, divorce, legal separation, death of the covered employee or a dependent child aging out of eligibility. COBRA does not apply to life insurance or other non-health benefits. People who become eligible for Medicare or Medicaid after losing coverage may have different continuation of coverage options.