3 Common COBRA Errors to Avoid

Reduce COBRA Errors by Learning COBRA Coverage Requirements for Employers

What is COBRA?

COBRA (Consolidated Omnibus Budget Reconciliation Act) can be confusing. It can cost small business owners over $300 per day in penalties if not administered correctly.

When You Need to Offer COBRA

If your business employs 20 or more employees and offers a group health plan, COBRA requires you to provide former employees and dependents with the opportunity to continue group health insurance coverage for a designated time.

COBRA Administration Common Errors

The small businesses we work with often face these 3 common errors when administering COBRA. Read on to see how you can avoid these administration hazards.

Not Understanding When to Offer COBRA

Employers are often confused about when to offer COBRA (the Qualifying Event). Who should receive coverage? How long they are eligible for the benefit?

COBRA requirements are triggered when a Qualifying Event occurs that ends the employee, spouse or dependent group health insurance coverage. Length of time an employer must offer extended coverage can vary based on the qualifying event and disability status. In the qualifying event chart below, you can see what the events are, who should receive coverage, and the length of the coverage.

Qualifying EventsEntitled to CoverageLength of coverage
Voluntary termination– Employee
– Spouse
– Dependent(s)
18 months
(29 months for disabled)
Involuntary termination (except for gross misconduct)– Employee
– Spouse
– Dependent(s)
18 months
(29 months for disabled)
Reduction of hours of employee causing loss of coverage– Employee
– Spouse
– Dependent(s)
18 months
(29 months for disabled)
Employee enrollment in medicare– Spouse
– Dependent(s)
36 months
Employee divorce or legal separation– Former spouse
– Dependent(s)
36 months
Employee death– Surviving spouse
– Dependent(s)
36 months
Dependent loss of coverage (marriage or age)– Dependent36 months

Failing to Send an Accurate & Timely COBRA Election Notice

The complex COBRA process often requires the employer to send a variety of  notices. Complying with the COBRA Election Notice requirements challenges many independent grocers. Here’s an overview of how it works:

  • Employer notifies the group health plan of the Qualifying Event

  • The plan must send a COBRA Election Notice to the individuals entitled to coverage (employee, spouse, dependents).

  • Must be provided within 14 days of when the group health plan receives notification of a Qualifying Event

  • The Notices describe the recipients’ rights under COBRA such as, how to enroll in COBRA and payment requirements

  • The Employer is responsible if the group health plan does not send the required COBRA Election Notices

Accurately providing information in the COBRA Election Notice can trip up even the most diligent employer. We suggest adhering to the Department of Labors’ model COBRA Election Notice to ensure you include the required information. The DOL (Department of Labor) deems use its model election notice as good faith.

Improperly Setting COBRA Premiums

Many employers mistakenly believe they must continue their employer contribution for the group health plan for COBRA participants. They are often surprised to learn that whether to charge and how much to charge COBRA participants is at the discretion of the employer. BUT, it is very important that employers follow the law when setting COBRA premiums and payment requirements including:

  • The premium charged cannot exceed 102% of the cost of coverage

  • The premium charged must remain consistent for each 12-month premium period unless there is an increase in the plan premiums during that period.

  • If a qualified beneficiary receives the 11-month extension due to disability, the premiums for the additional 11 months can be increased to 150% of the cost of coverage.

COBRACompli – A Solution for COBRA Errors Compliance

MyHRConcierge offers COBRACompli™— a COBRA compliance and administration service for SMBs with 20 or more employees. We help our clients navigate the confusing world of COBRA and keep them in compliance with the law’s rules and regulations.

Let us worry about your COBRA administration. Using COBRACompli, we will reduce your overhead and financial risk. MyHRConcierge will:

  • Fulfill COBRA deadline, notification, and tracking requirements
  • Keep up with ongoing changes to COBRA regulations
  • Respond quickly and accurately to inquiries
  • Collect premiums and remit them to you
  • Alert carriers to COBRA reenrollments and terminations

Start by contacting MyHRConcierge today at 1-855-538-6947 ext.108 or email ccooley@myhrconcierge.com.