The Consolidated Omnibus Budget Reconciliation Act, more commonly known as COBRA, is a federal regulation that typically requires employer sponsored group health plans to offer continuation of coverage to qualified beneficiaries after a qualifying event.

Qualifying Events

A qualifying event is a specific occurrence that causes a covered employee to lose their health coverage under their employers’ group health plan. Qualifying events for covered employees include:

• An employment termination (other than gross misconduct)
• A reduction in work hours

Qualifying events for the spouse or dependent child of a covered employee include:

• Covered employee’s employment termination (other than gross misconduct)
• Covered employee’s reduction in work hours
• Divorce (or legal separation) from covered employee
• Covered employee’s death
• Covered employee becomes entitled to Medicare (specific requirements must be met for this to apply)

Qualifying Beneficiaries

The qualifying beneficiaries of the group health plan are determined by the type of qualified event that occurred and the length for which a plan is required to offer continuation of coverage. Standard qualifying beneficiaries include:

• A covered employee
• A spouse or former spouse of a covered employee
• The dependent children of a covered employee

Non-standard qualifying beneficiaries (that are only considered qualified beneficiaries in specific cases) include:

• If the employer sponsoring the group health plan declares bankruptcy, retired employees, their spouses (including former spouses), and dependent children
• Any children of a covered employee that is born or adopted during which the employee is covered by COBRA
• Other entities covered under the employer’s group health plan such as an employer’s agents, independent contractors, and directors

COBRA Administration

There are complex legalities surrounding COBRA Administration, and group health plans are required to have a dedicated plan administrator. It is the administrator’s job to carry out the requirements of COBRA.

While many companies opt to allow their HR department to handle administering COBRA coverage, providing required notices, and ensuring regulatory compliance, others opt for a third-party administrator (TPA) to handle their COBRA facilitation and management.

Regardless of the COBRA administration solution in place, the following must be managed:

• Required notices
• Election & payment deadlines
• Late & partial payments
• Different coverage periods
• Changes to plan options
• Address changes
• Terminations of coverage

Employers who fail to comply with COBRA regulations may face:

• An IRS excise tax or penalty upon an audit
• Potential legal action from impacted employees
• Penalties from the US Department of Labor

As such, it is crucial to ensure an employer remains compliant with COBRA requirements.

Partnering with Pierce Group Benefits

To learn more about COBRA administration and how we can support your organization’s compliance and continuation coverage needs, contact your PGB Account Executive or email  partnership@piercegroupbenefits.com for personalized assistance.