COBRA (Consolidated Omnibus Budget Reconciliation Act)
Definition
A federal law that allows employees to continue group health insurance after job loss or certain other events.
What is COBRA?
COBRA gives eligible employees and their families the right to continue group health benefits for a limited time after losing job-based coverage due to events like voluntary or involuntary job separation, reduction in hours, divorce, or death.
Why is COBRA Important for Employers?
As of 2025, employers with 20+ employees are required by federal law to offer COBRA continuation coverage. Failing to comply can result in IRS penalties and ERISA violations. COBRA also:
- Provides a safety net for transitioning employees
- Ensures legal compliance and protects the company from liability
- Requires accurate, timely notices and documentation
FAQs
Do employers have to pay for COBRA coverage?
No. Employees typically pay the full cost of coverage, plus an admin fee.
How long does COBRA coverage last?
Generally 18 months, with potential extensions for certain events.
What if we miss a COBRA notice deadline?
You could face penalties of up to $100 per day per affected individual.
How ExtensisHR Can Help
As part of our benefits administration services, ExtensisHR handles COBRA administration from start to finish. This includes:
- Administering COBRA on your behalf
- Managing employer requirements
- Verifying compliance with IRS, DOL, and HHS
- Carrier communication and termination