COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows employees and their families to continue their health insurance coverage for a limited time after losing their job or experiencing another qualifying event.

Businesses with 20 or more employees that offer group health plans are generally required to comply with COBRA regulations.

Qualifying events for COBRA coverage include:

• Voluntary or involuntary job loss (except for gross misconduct)
• Reduction in the number of hours worked
• Divorce or legal separation
• Death of the covered employee
• A dependent child losing dependent status

Coverage typically lasts for 18 months but can be extended to 36 months in certain situations, 

Under COBRA, employers must:

1. Notify Employees: Provide written notice of COBRA rights to employees and their families when they first join the health plan and again if a qualifying event occurs.
2. Offer Continuation Coverage: Offer continuation of the same health coverage at group rates.
3. Manage Enrollment: Handle the administration of COBRA enrollments and premiums.
4. Maintain Documentation: Keep detailed records of notices, payments, and correspondence related to COBRA coverage.

The initial COBRA notice should include:

• An explanation of COBRA rights and obligations
• Information about how to elect COBRA coverage
• Details about the premiums, coverage periods, and payment instructions

Employers can charge up to 102% of the cost of the health plan premiums (including the employee's share and the employer's share, plus a 2% administrative fee). Premiums must be paid on time to avoid cancellation of COBRA coverage.

Non-compliance can result in significant penalties, including fines from the Department of Labor and potential lawsuits from former employees. It is essential to adhere to all COBRA requirements to avoid these consequences.

For support, the Department of Labor’s website offers detailed guidance and resources.  Small businesses can also consult with HR professionals, legal advisors, or third-party administrators (TPAs) who specialize in COBRA compliance, to ensure compliance and reduce the administrative burden.

This Q&A does not constitute legal advice and does not address state or local law.