The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law passed in 1985 that gives workers and their families the right to continue their group health insurance after certain life events. For employers, COBRA means added responsibilities whenever employees lose coverage.
Understanding COBRA is critical—it protects employees during transitions and keeps businesses compliant.
What COBRA covers
COBRA requires employers to give eligible employees and their dependents the option to continue their health insurance when coverage would otherwise end. This continuation can last 18 to 36 months, depending on the situation.
Qualifying events include:
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Job loss (voluntary or involuntary, except for gross misconduct)
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Reduction in work hours
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Divorce or legal separation from the covered employee
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Death of the covered employee
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A dependent child aging out of eligibility under the plan
Employees who elect COBRA coverage must pay the full premium—both the employee and employer portions—plus a small administrative fee.
Who must comply with COBRA
COBRA applies to private-sector employers with 20 or more employees that offer group health insurance. Smaller employers may be covered by similar state laws, often referred to as “mini-COBRA.”
Employer responsibilities under COBRA
Employers have strict notice and administrative requirements, including:
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Providing written notice of COBRA rights when employees first enroll in the health plan
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Sending timely COBRA election notices after a qualifying event
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Offering coverage identical to what the employee had before the event
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Tracking deadlines carefully, as missed notices can result in penalties
Common mistakes employers make
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Missing deadlines for sending COBRA notices
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Forgetting to notify dependents separately when required
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Failing to apply COBRA rules to part-time staff who lose coverage
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Overlooking state-specific continuation requirements
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Mishandling premium collection or termination of COBRA coverage
Penalties for violations
Failing to comply with COBRA can be costly. Employers may face:
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Excise taxes of up to $100 per day per affected employee
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Penalties from the Department of Labor (DOL) for late or missing notices
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Lawsuits from employees seeking coverage and damages
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Attorney’s fees and court costs
How to stay compliant
- Work closely with your benefits provider or administrator to manage COBRA notices.
- Keep clear records of when qualifying events occur and when notices are sent.
- Train HR staff on COBRA requirements and timelines.
- Review state “mini-COBRA” rules if you have fewer than 20 employees.
- Audit your COBRA processes regularly to catch gaps before they become penalties.
How Kubera HR Solutions can help
At Kubera HR Solutions, we help employers streamline COBRA compliance by reviewing benefits administration, training HR teams, and setting up systems to track notices and deadlines. Our goal is to reduce your risk of costly penalties while ensuring employees and their families have access to coverage when they need it most.