COBRA Plan Administrator Notification: Deadlines and Penalties

A COBRA plan administrator has four notification duties under federal law: a general notice within 90 days of a person joining the group health plan, an election notice within 14 days of learning about a qualifying event, a notice of unavailability when a request for continuation coverage is denied, and an early termination notice when coverage ends before the maximum period. Missing any of them exposes the plan to an IRS excise tax of $100 per day per affected beneficiary and to private lawsuits under ERISA.

Which Plans These Duties Apply To

Federal COBRA rules reach private-sector group health plans maintained by employers that had at least 20 employees on more than half of their typical business days in the prior calendar year. Part-time workers count as fractions of a full-time employee based on their hours, so an employee working 20 hours at a 40-hour-week company counts as half.¹

Federal government plans and church or church-related plans are exempt regardless of size. Employers under the 20-employee threshold fall outside federal COBRA entirely, though a majority of states run their own “mini-COBRA” statutes with continuation periods that vary by state and qualifying event. If the plan you administer is one of these exempt or sub-threshold plans, the notice duties described below do not apply to you as a matter of federal law.

The General Notice: 90 Days From Coverage

The first duty is educational and runs off the calendar rather than any life event. When an employee, and a spouse if applicable, first becomes covered under the group health plan, the administrator must send a written general notice explaining COBRA rights within 90 days of the date coverage begins.² The notice tells participants what kinds of events could qualify them for continuation coverage, what they will have to do if such an event happens, and how the plan’s notification process works.

A single mailing sent by first-class mail to the employee’s last known home address satisfies the delivery requirement for both the employee and their spouse when they share an address. Skipping the general notice creates a problem that surfaces later. The 60-day window participants get to report certain qualifying events does not start running until they have been informed of that responsibility, either through this general notice or through the plan’s summary plan description. Miss the notice, and the clock you rely on may never have started.

Learning About a Qualifying Event

The 14-day election notice deadline is triggered by information reaching the administrator. That information can come from the employer or from the participant, depending on the event.

Events the Employer Must Report

When a covered employee dies, leaves the job for any reason other than gross misconduct, has work hours reduced enough to lose plan eligibility, or becomes entitled to Medicare, the employer must notify the plan administrator within 30 days.³ An employer’s bankruptcy can also qualify for retirees and their families who lose coverage as a result.

The 30-day clock generally starts on the date of the event. If the plan measures continuation coverage from the date coverage is actually lost rather than the date of the event, the deadline runs from the loss-of-coverage date. Multi-employer plans can set their own notice periods in plan documents and may eliminate the employer-notice step entirely, tracking qualifying events themselves.⁴

When the employer is also the plan administrator, the two clocks merge. You have 44 days from the qualifying event to get the election notice into the beneficiary’s hands.⁵

Events the Participant Must Report

Divorce, legal separation, and a child aging out of dependent status are events the employer may never see. Federal regulations place the reporting duty on the covered employee or qualified beneficiary.⁶ The plan can set its own deadline, but not shorter than 60 days from the latest of: when the event happened, when coverage was lost or would be lost because of it, or when the individual was first informed of the reporting duty through the general notice or the summary plan description.⁷

Participants also have to notify the administrator if a qualified beneficiary receives a Social Security Administration disability determination during the first 60 days of COBRA coverage, which can support an 11-month extension of the coverage period. The same 60-day minimum applies. If SSA later reverses the disability finding, the participant has at least 30 days to report that change.

The Election Notice: 14 Days From Notification

Once the administrator receives notice of a qualifying event, from whichever source, the most time-sensitive obligation starts. The administrator has 14 days to send each qualified beneficiary a written election notice.⁸ The regulation prescribes the notice’s contents with unusual specificity, and every required element has to be there.

A compliant election notice includes:

The name of the health plan and the name, address, and phone number of whoever administers continuation coverage.
Which qualifying event occurred, which individuals are recognized as qualified beneficiaries, and the date coverage will end if nobody elects COBRA.
A statement that each qualified beneficiary can elect independently, and that a spouse or parent can elect on behalf of others.
How to make the election, the length of the election period, and the specific date by which the election must be made.
What happens if the beneficiary declines or waives coverage, including effects on portability rights, guaranteed access to individual coverage, and special enrollment rights.
What benefits continuation coverage includes, when it starts, the maximum period, and events that could cause earlier termination.
The premium amount, which can be up to 102% of the plan’s cost for similarly situated active employees (the full cost plus a 2% administrative fee).¹
An explanation of circumstances that could extend coverage, such as a second qualifying event or a disability determination.

The Department of Labor publishes model election notices in multiple languages that, properly completed, satisfy the content requirements.⁹ Most administrators use them. Missing even one required element from a custom notice can be treated as failing to send the notice at all.

First-class mail is the usual delivery method, and it invokes the mailbox rule to establish the date of service. Keep a certificate of mailing or a detailed mailing log. That documentation is what you produce when a beneficiary later claims the notice never arrived.

Notice of Unavailability

When a plan administrator receives notice of a qualifying event and decides the individual is not entitled to continuation coverage, the administrator must send a written notice of unavailability explaining why. This notice runs on the same 14-day window that applies to election notices and must be written so the average participant can understand it.⁸ Silently ignoring a request is not an option; a denial has to be documented and sent.

Notice of Early Termination

If COBRA coverage has to end before the maximum period runs out, the administrator must issue an early termination notice as soon as practicable after the decision. Common triggers include a missed premium payment, the employer ceasing to maintain any group health plan, or the beneficiary obtaining other group health coverage. The notice must state the termination date, the reason coverage is ending, and any rights the beneficiary has to elect alternative coverage.⁷

Penalties for Missing a Notice Deadline

Two separate financial exposures apply. Under the Internal Revenue Code, the IRS can impose an excise tax of $100 per day for each qualified beneficiary affected by the failure. When more than one beneficiary is involved in the same qualifying event, the daily cap is $200.¹⁰ The noncompliance period runs from the date of the failure until it is corrected or six months after the end of the applicable coverage period, whichever comes first. For a single beneficiary whose notice arrives two months late, that is $6,000 in excise taxes alone.

Separately, ERISA lets qualified beneficiaries sue the plan administrator in federal court for failing to provide required notices. Courts can impose daily penalties under ERISA section 502(c)(1), which are adjusted periodically for inflation and have historically run over $100 per day. Beneficiaries can also seek other relief, including the cost of medical care they would have received had they been properly notified and given the chance to elect coverage. Between excise taxes, court-imposed penalties, and liability for uncovered medical bills, sloppy recordkeeping gets expensive fast.

1
U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage
2
eCFR. 29 CFR 2590.606-1 – General Notice of Continuation Coverage
3
eCFR. 29 CFR 2590.606-2 – Notice Requirement for Employers
4
U.S. Department of Labor. An Employee’s Guide to Health Benefits Under COBRA
5
Centers for Medicare & Medicaid Services. COBRA Continuation Coverage Questions and Answers
6
eCFR. 29 CFR 2590.606-3 – Notice Requirements for Covered Employees and Qualified Beneficiaries
7
U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers
8
eCFR. 29 CFR 2590.606-4 – Notice Requirements for Plan Administrators
9
U.S. Department of Labor. FAQs About COBRA Model Notices
10
Office of the Law Revision Counsel. 26 USC 4980B – Failure to Satisfy Continuation Coverage Requirements of Group Health Plans