If you’ve ever had that sinking feeling of wondering, “Did we send that COBRA notice on time?” you’re not alone. COBRA compliance is one of those tasks that hides in the background of HR and benefits administration… until suddenly it doesn’t. Miss a deadline or send the wrong paperwork, and the fallout can mean fines, frustrated former employees, and hours of cleanup you definitely didn’t budget for.

The truth is, COBRA isn’t complicated because the law itself is tricky. It’s complicated because it’s time-sensitive, high-stakes, and easy to miss in the middle of everything else HR is juggling. Every termination, retirement, or hours reduction can trigger a fresh round of rules and timelines. And employees are relying on you to get it right.

The challenge is that most employers don’t feel entirely confident with COBRA. In fact, our recent Selerix Employee Benefits Survey found that two-thirds of COBRA-eligible employees said the guidance they received about continuation coverage was unclear — or missing altogether. That gap puts compliance, and trust, at risk.

To help put you on firmer footing, our Selerix team wanted to offer a clear, plain-English roadmap for COBRA compliance. We’ll walk through the rules, the notice requirements, the timelines, and what happens if things fall through the cracks, so you can protect your organization and keep things running smoothly.

What Are the COBRA Requirements for Employers?

First, let’s talk about what COBRA is. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, and it requires certain employers to give employees and their dependents the option to continue their group health coverage after it would otherwise end. Sounds simple, but the rules behind it are very specific.

Here’s what employers need to know:

Who must offer COBRA?

• Employers with 20 or more employees on more than half of typical business days in the previous year.
• This includes private-sector employers and most state/local governments (federal plans and some church plans are exempt).
  

Who qualifies?

• Employees (and their covered dependents) who lose coverage due to a qualifying event—like job loss (voluntary or involuntary), reduction in hours, divorce, or a dependent aging out of coverage.

How long must coverage last?

• Typically 18 months for job loss or reduction in hours.
• Up to 36 months for other events (like divorce or a dependent aging out).
  

What’s the employer’s role?

• Notify the plan administrator of a qualifying event within 30 days.
• Ensure employees/dependents receive a COBRA election notice within the required timeframe (we’ll get into those deadlines in the next section).
• Keep accurate records to prove notices were sent (because regulators expect documentation).

COBRA doesn’t require employers to subsidize coverage, but it does require you to offer it. Employees typically pay the full premium plus a 2% admin fee, but it’s on the employer to make sure they have the choice.

Think of COBRA like a chain of custody. Each step — notification, election, payment — has a clear deadline, and if one link breaks, you risk non-compliance in healthcare.

COBRA Notice Requirements: What, When, and How

At its core, COBRA is mainly about notices. If you get the paperwork and timelines right, you’re on solid ground. If you don’t, penalties and lawsuits can pile up fast. Here’s a breakdown of the major notice responsibilities for employers:

Employers are on the hook for getting qualifying event notices out the door quickly. From there, the plan administrator (which could be the employer or a third-party vendor) has the responsibility to deliver election notices on time.

Missing a single notice  can lead to daily excise tax penalties and, in some cases, court-ordered damages.

COBRA Compliance Timeline for Employers

One of the trickiest parts of COBRA is the clock. Every qualifying event starts a new countdown, and missing even a single deadline can mean penalties. Here’s how the timing works in practice:

Standard COBRA Timeline

1. Day 0 – Qualifying Event Occurs
   • Employee loses coverage due to termination, reduction in hours, divorce, or another qualifying event.
     
2. Within 30 Days – Employer Notice
   • Employer notifies the plan administrator of the event.
     
3. Within 14 Days After Notification – Election Notice
   • Plan administrator sends the COBRA election notice to the employee/dependent.
   • If the employer is also the plan administrator, they have 44 days total from the qualifying event to send this notice.
     
4. 60 Days – Employee Election Window
   • Employee/dependent has 60 days from either the date coverage would have ended or the date of the election notice (whichever is later) to decide whether to elect COBRA.
     
5. 45 Days – Initial Premium Payment
   • Once COBRA is elected, the individual has 45 days to pay the first premium.
     
6. Monthly Ongoing Payments
   • After the initial payment, monthly premiums are due, typically with a 30-day grace period.
     

What Happens if You Miss a COBRA Deadline?

COBRA compliance is a best practice, but also a legal obligation. And when deadlines are missed, the penalties add up quickly.

Here’s what employers risk if they fail to send notices or meet requirements:

• IRS Excise Taxes
  Employers may face an excise tax of $100 per day, per qualified beneficiary (capped at $200 per family). For even a small group, that can snowball into tens of thousands of dollars in penalties.
  
• Department of Labor (DOL) Penalties
  The DOL can impose penalties of up to $110 per day for failure to provide COBRA election notices.
  
• Lawsuits from Employees or Beneficiaries
  Employees can sue for coverage costs, statutory penalties, attorney’s fees, and damages. Courts have consistently sided with employees when employers failed to provide timely COBRA information.
  
• Administrative Headaches
  Even if penalties aren’t applied, failing to send notices creates stress, lost time, and reputational damage with employees who already may be leaving under difficult circumstances.
  

Missing COBRA deadlines can be costly. One employer was ordered to pay over $40,000 in medical claims — plus attorney’s fees — for failing to send a COBRA election notice. Add potential IRS and DOL penalties, and the price of non-compliance skyrockets.

Clear processes, strong documentation, and the right communication tools can keep employers compliant, and out of court.

Do You Have to Offer COBRA in Every State?

The short answer: Yes. If you’re covered by federal COBRA law, the rules apply no matter where your employees live.

COBRA is a federal law, which means that employers with 20 or more employees (on more than half of the business days in the previous calendar year) must offer continuation coverage after qualifying events, regardless of the state.

But here’s where it gets tricky:

• State “Mini-COBRA” Laws
  Many states have their own continuation coverage rules, often called “mini-COBRA.” These usually apply to smaller employers (fewer than 20 employees) who aren’t covered by the federal law. For example, states like New York, California, and Texas extend continuation coverage to small businesses, sometimes with longer coverage periods than federal COBRA.
  
• Interaction with Federal COBRA
  If your organization is large enough to be subject to federal COBRA*, those requirements always apply. But depending on where you operate, you may also need to coordinate with state-level rules, especially if you have employees in different states.
  
• What Employers Need to Do
  • Confirm whether you fall under federal COBRA (20+ employees).
  • If you’re smaller or operate across multiple states, check state continuation laws that may expand coverage obligations.
  • Update employee communications to reflect both federal and state rights where applicable.

Employers don’t get to pick between federal or state rules. You must comply with whichever laws apply to your workforce. For multi-state employers, that often means managing both at the same time.

*Federal COBRA applies to employers with 20 or more employees on more than 50% of the typical business days in the previous calendar year.  This includes both FT and PT employees (with part-time counted as a fraction of full-time based on hours worked). If the organization meets this threshold, COBRA requirements apply regardless of location—and you may also need to coordinate with state-level continuation laws (e.g. California, NY) if an organization operates in multiple states.

COBRA & International Employees: What to Know       

COBRA applies if the employee was covered under a U.S. health plan. Always check plan details and employee status to confirm eligibility. I would recommend keep it simple and high-level, if you choose to include something.

Frequently Asked Questions About COBRA Rules for Employers

Who pays for COBRA coverage?
Employees (or their dependents) usually pay the full cost of the health plan premium, plus up to a 2% administrative fee. Employers are not required to subsidize COBRA, though some choose to during severance agreements.

How long does COBRA coverage last?
Coverage typically lasts 18 months after job loss or reduction in hours, and up to 36 months for certain other events like divorce or a dependent aging out of coverage.

How long does an employer have to send COBRA paperwork?
Employers have 30 days to notify the plan administrator of a qualifying event. The plan administrator then has 14 days to send the COBRA election notice. If the employer is also the plan administrator, they have 44 days total.

Can COBRA coverage end early?
Yes. COBRA can end if premiums are not paid on time, if the employer stops offering group health coverage altogether, or if the individual gains coverage under another group health plan or Medicare.

Can employers outsource COBRA compliance?
Absolutely. Many employers use third-party administrators to handle notices, timelines, and premium collections. Even if you outsource, however, an employer remains responsible for compliance under the law.

Managing COBRA-Adjacent Compliance with Selerix

COBRA is just one piece of a much larger compliance puzzle. HR and benefits teams are also juggling ACA reporting, HIPAA protections, workplace safety notices, and multi-state leave laws, all with strict deadlines and little margin for error. It’s a lot to keep track of, and even small gaps can carry outsized risk.

That’s where technology and trusted partners come in. At Selerix, we help employers simplify the complexity. From benefits administration and communication to ACA reporting to benefits compliance, our solutions are designed to keep HR teams confident and audit-ready—without adding more to their plates.

When COBRA rules are managed alongside your broader benefits and compliance processes, you get more than peace of mind. You get a system that reduces risk, saves time, and keeps your people supported at every stage of their journey.

Ready to reduce compliance risk?
Download our ACA Compliance checklist, or explore how Selerix can help you simplify benefits communication and administration — COBRA included.
Explore COBRA Compliance Solutions