COBRA Administration: Managing Continuation of Health Benefits

The Consolidated Omnibus Budget Reconciliation Act of 1985—universally known as COBRA—represents one of the most complex and compliance-intensive federal benefit mandates affecting American employers. COBRA requires group health plans sponsored by employers with 20 or more employees to offer continuation coverage to employees and their dependents who lose coverage due to qualifying events such as termination of employment, reduction in work hours, divorce, death, or loss of dependent child status. This federal mandate affects approximately 7 million individuals annually who elect COBRA coverage to maintain health insurance during employment transitions, family status changes, or other coverage losses. With employers facing penalties of $100 per day per affected individual for notification failures—potentially reaching $200,000 or more per violation for large-scale notification breakdowns—and additional penalties of $110 per day per participant for other compliance failures, COBRA administration constitutes critical compliance obligation requiring meticulous attention to notice deadlines, coverage calculations, and procedural requirements.