COBRA and State Continuation

COBRA Notices

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Employers with group health plans subject to COBRA are required to provide plan participants and qualified beneficiaries with information about COBRA continuation rights at different points in time. 

Many employers use a third-party COBRA administrator to assist with these notice requirements.  However, even if an employer uses a COBRA administrator, the employer may remain responsible for providing the Initial Notice. The employer will also remain responsible for  notifying the COBRA administrator when some qualifying events occur (i.e. termination of employment, reduction in hours, the employee’s death, or the employee’s Medicare entitlement) so that the administrator will know to provide a qualifying event notice (or election notice) to qualified beneficiaries. In addition, the employer should verify the COBRA administrator will provide all other notices within applicable time frames using compliant delivery methods. 

There are five different notices that must be used for compliant COBRA administration.  Each of these are set forth below.

Initial COBRA Notice (or General Notice)

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Initial COBRA Notice

The plan administrator must distribute a COBRA Initial Notice to all participants and spouses within 90 days of the effective date of their coverage. The notice informs plan participants of COBRA continuation rights and responsibilities upon the occurrence of a qualifying event, including the requirement to notify the plan within 60 days of the occurrence of a qualifying event.

COBRA Election Notice

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COBRA Election Notice

The plan administrator must distribute a COBRA Election Notice to qualified beneficiaries informing them of their COBRA rights when a qualifying event causes a termination of coverage. The Election Notice must be provided within 14 days after receiving notification of a qualifying event.

Notice of Unavailability of Continuation Coverage

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Notice of Unavailability of Continuation Coverage

The plan administrator must provide a notice when COBRA is not available in connection with a qualifying event, a second qualifying event, or a determination of disability from the Social Security Administration.  

Notice of Underpayment of COBRA Premium

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Notice of Underpayment of COBRA Premium

If a monthly premium is underpaid, but not by more than the lesser of $50 or 10% of the premium to be paid, the plan has two options: (i) treat it as a payment in full; or (ii) issue a notice requiring that the participant make up the shortfall.

Notice of Termination of Continuation Coverage

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Notice of Termination of Continuation Coverage

If COBRA coverage is terminated prior to the maximum COBRA period (generally 18, 29, or 36 months depending on the type of qualifying event), notice of termination must be provided as soon as practicable. COBRA coverage may only be terminated early for the following reasons: (i) nonpayment; (ii) employer ceases to provide a group health plan; (iii) qualified beneficiary becomes covered under another group health plan or entitled to Medicare; (iv) disabled qualified beneficiary is determined not to be disabled; or (vi) for cause.

Model Notices

The IRS provided model notices for two of the most important notices: 

  1. The Initial (or General) Notice, which provides participants with information about COBRA continuation rights; and 
  2. The Election Notice, which provides information after a qualifying event causes a loss of coverage, providing qualified beneficiaries with an opportunity to elect COBRA continuation coverage.

Delivery Requirements

For each required notice, the paper notice must be actually handed to each applicable individual or mailed to their home.  Electronic delivery is allowed if DOL safe harbor requirements are satisfied; however, this method is unlikely to reach spouses and therefore is not recommended.