COBRA Administration Checklist

Confirm that the employer maintained a group health plan and employed 20 or more employees on more than 50 percent of its typical business days in the prior calendar year, meeting the COBRA coverage threshold under IRC Section 4980B.

Inventory all employer-sponsored group health plans that are subject to COBRA, including medical, dental, vision, prescription drug, health FSAs, EAPs, and HRAs, and confirm whether any plans are exempt (such as health FSAs that qualify for the limited exception).

Furnish the initial General Notice of COBRA continuation coverage rights to each covered employee and spouse within 90 days of coverage beginning, as required by the DOL model notice guidance.

Establish procedures to ensure the employer notifies the plan administrator (or third-party COBRA administrator) within 30 days of a qualifying event that is known to the employer, such as termination, reduction in hours, or the employee's death.

Communicate to covered employees and their families the obligation to notify the plan administrator within 60 days of a qualifying event known only to them, such as divorce, legal separation, a dependent child losing eligibility, or a second qualifying event.

Maintain a reference of qualifying events including voluntary or involuntary termination (other than for gross misconduct), reduction in hours, employee's death, divorce or legal separation, a dependent child ceasing to be a dependent, and the employee becoming entitled to Medicare.

Provide the election notice to each qualified beneficiary within 14 days after the plan administrator receives notification of the qualifying event, using a notice that complies with DOL model notice requirements and clearly explains rights and deadlines.

Provide qualified beneficiaries at least 60 days from the later of the date of the qualifying event or the date the election notice is provided to elect COBRA continuation coverage, without pressuring or shortening the election window.

Upon receiving a timely COBRA election, enroll the qualified beneficiary retroactively to the date coverage was lost and ensure there is no gap in coverage, including processing any claims incurred during the election period.

If a qualified beneficiary initially waives COBRA coverage, allow them to revoke the waiver and elect coverage at any time before the 60-day election period expires, with coverage beginning on the date of the revocation.

Apply the correct maximum continuation period: 18 months for termination or reduction in hours, 36 months for divorce, legal separation, dependent child loss of eligibility, or death, and 29 months when a disability extension applies.

Calculate the COBRA premium as 102 percent of the full cost of coverage (employer and employee portions combined), or 150 percent during the 11-month disability extension period, and communicate the exact amount on the election notice.

Provide qualified beneficiaries 45 days from the date of their COBRA election to make the initial premium payment covering the period from the qualifying event to the election date, without terminating coverage during this window.

Allow a 30-day grace period for each monthly COBRA premium payment after the initial payment, and do not terminate coverage for non-payment until the grace period has fully expired without payment being received.

Track all COBRA premium payments by qualified beneficiary, including dates received, amounts, coverage periods, and any shortfall notifications, maintaining records sufficient to demonstrate proper administration.

If a qualified beneficiary's payment is short by an insignificant amount (the greater of $50 or 10 percent of the required premium), provide written notice of the deficiency and allow 30 days to cure the shortfall before terminating coverage.

End COBRA continuation coverage only upon the occurrence of a permitted termination event: expiration of the maximum coverage period, failure to pay premiums within the grace period, the qualified beneficiary obtaining other group health coverage, the qualified beneficiary becoming entitled to Medicare, or the employer ceasing to maintain any group health plan.

Send written notice to the qualified beneficiary as soon as practicable when COBRA coverage terminates before the end of the maximum coverage period, explaining the reason for termination and the date coverage will end.

Extend the 18-month COBRA coverage period to 29 months when a qualified beneficiary is determined by the Social Security Administration to be disabled within the first 60 days of COBRA coverage, provided the beneficiary notifies the plan within 60 days of the SSA determination and before the end of the 18-month period.

Extend the maximum coverage period from 18 months to 36 months when a second qualifying event (such as divorce, death, or Medicare entitlement) occurs during the initial 18-month COBRA period, if the qualified beneficiary provides timely notice to the plan administrator.

Retain all COBRA-related documentation including general notices, election notices, election forms, premium payment records, correspondence, and termination notices for at least six years, in line with ERISA's general document retention recommendations.

If using a third-party COBRA administrator, establish clear service-level agreements for notice delivery timelines, premium collection, enrollment processing, and reporting, and monitor compliance through regular audits.

Be aware that failure to comply with COBRA requirements can result in an excise tax of $100 per day per qualified beneficiary under IRC Section 4980B, DOL civil penalties, and potential lawsuits by qualified beneficiaries for coverage and damages.

Update COBRA administration procedures and beneficiary communications whenever the group health plan changes carriers, modifies benefits, adjusts premiums, or undergoes open enrollment to ensure COBRA participants receive equivalent coverage options.

Conduct an annual review of COBRA administration including notice timeliness, premium accuracy, election processing, and termination procedures to identify and correct any compliance gaps before they result in penalties or litigation.