What Are The Key Components Of COBRA Administration?

11/6/2025

Proper COBRA administration involves several key components to ensure compliance with the law and provide continuation coverage to eligible individuals. Here are some of the key COBRA management rules for employers to follow:

• The Notification Process:

Employers are required to provide an initial COBRA notice to employees and their dependents about their rights under COBRA when they become eligible for group health coverage. This includes informing them of their rights to continue coverage if certain qualifying events occur. In addition to the initial notice, employers must provide various other notices throughout the COBRA coverage period, including notices about premium payment deadlines, changes to coverage options, and rights to extend coverage under certain circumstances.


• Eligibility Determination:

Employers must determine who is eligible for COBRA coverage based on the qualifying event and the individual's relationship to the covered employee (e.g., spouse, dependent child).


• Qualifying Events Determination:

Employers must determine which events qualify an individual for COBRA coverage. Qualifying events include termination of employment (other than for gross misconduct), reduction in hours worked, divorce or legal separation, death of the covered employee, and loss of dependent status.


• Election Process:

Once eligibility is determined, individuals have the right to elect COBRA coverage within a specified timeframe. Employers must provide the necessary forms and information to facilitate this election process.


• Premium Payments:

COBRA participants are required to pay the full cost of the premiums for their continued coverage, plus an additional administrative fee. Employers must establish processes for collecting these premium payments.


• Coverage Administration:

Employers or plan administrators must ensure that COBRA participants receive the same coverage options and benefits that were available to them before the qualifying event. This includes coordinating with insurance providers to maintain coverage.


• How To Determine Timelines And Calculate, Bill, And Collect Premiums:

There are many timelines for accepting coverage for both the employer and individuals who lose coverage, as well as multiple rules for the collection and termination of coverage due to payment times and amounts.


• Termination of Coverage:

COBRA coverage typically lasts for a specified period (e.g., 18 or 36 months, depending on the qualifying event). Employers must ensure that coverage is terminated promptly at the end of the COBRA period or if the participant fails to pay premiums.


• Recordkeeping:

Employers must maintain accurate records related to COBRA plan administration, including notices sent, elections made by participants, premium payments received, and termination of coverage dates.

By effectively managing these key components, employers can fulfill their obligations under COBRA and ensure that eligible individuals receive the continuation coverage to which they are entitled.