A quick and easy guide to ensure COBRA compliance

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a complex and detailed law protecting employees and qualified beneficiaries once they have been removed from their group health coverage due to a qualifying event. Despite its complexity, employers, employees and plan administrators are still accountable for staying in compliance with it.

One important aspect of staying compliant is awareness of the law’s key requirements and deadlines. With several various requirements and each requirement having a specific time span, saying it can be difficult to follow is an understatement. This a quick and easy guide to some basic COBRA compliancy requirements you may have overlooked.

First and foremost, we have listed qualifying events and which entity is responsible for notifying the plan administrator in each circumstance:

      The employer is responsible for notifying the plan administrator within 30 days if the qualifying event is employee death, termination, reduction of hours, eligibility for Medicare or bankruptcy of a private-sector employer.

      OR

      The qualified beneficiary is responsible for notifying the plan administrator if the qualifying event is divorce, legal separation, or a change in dependent status. The time limit for this notice is determined by the plan administrator, but must be at least 60 days.

Furthermore, we have outlined 5 additional key requirements and their deadlines to make your COBRA compliancy as easy as possible.

  1. After being notified of the qualifying event, the plan administrator has 14 days to provide participants with an election notice.
  2. You must provide the covered employee and their spouse a general notice informing them of their COBRA rights within the first 90 days of the coverage.
  3. The plan must provide a Summary Plan Description to the employee within 90 days of them participating in the plan.
  4. The qualified beneficiaries must have a minimum of 60 days to choose to elect COBRA or not.
  5. COBRA offers a maximum coverage time of 18 months, 29 months, or 36 months depending on the qualifying event. Special circumstances, like disability or a second qualifying event, can extend an 18 month coverage.

Outside of meeting deadlines, there are other specific standards that must be met for continuation coverage. For example:

  • The provided coverage must be identical to the plan the qualified beneficiaries were covered under prior to COBRA.
  •  In the case the employee is required to pay for the continuation coverage, the cost can only be 102% of the full cost of the plan. The additional 2% may be charged as an administration fee.
  • If the coverage is terminated early, the plan must give notice to the plan participant as soon as possible and the notice must provide more detailed information on the termination like when it will be terminated and why.

Now you have the basics to start ensuring COBRA compliancy in your business practices. For more specific information or further questions, the Department of Labor produced a guide for employers dealing with COBRA that you can find here.