COBRA obligations for employers

Not legal advice; consult benefits counsel. This page is general information for an employer at or above 20 employees that sponsors a group health plan. Each legal statement is attributed to a federal source we read on 14 October 2026. Nothing here is a determination about any plan, employer or individual.

What this page adds

Related pages cover the plan-design and lifecycle context: how funding structures differ in level-funded health plans, the wider exit and transition tasks in employee lifecycle operations, the 50-employee ACA threshold in the ACA employer mandate guide and leave rules in the FMLA employer guide. This page is the COBRA lookup: coverage test, events, notices, windows and premium.

Which employers and plans are covered

29 U.S.C. 1161(b) (retrieved 14 Oct 2026) states that the continuation requirement does not apply to a group health plan for a calendar year “if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year.” Treasury’s regulation at 26 CFR 54.4980B-2, Q&A-5 (retrieved 14 Oct 2026) defines the test: an employer is considered to have normally employed fewer than 20 employees if, and only if, it had fewer than 20 employees on at least 50 percent of its typical business days during that year. It states that all full-time and part-time common law employees count, with each part-time employee counted as a fraction; self-employed individuals, independent contractors and corporate directors are not counted; and that the employer includes members of a controlled group under sections 414(b), (c), (m) or (o) (Q&A-2). Its own example finds a plan not small-employer because a controlled group, including foreign members, normally employed at least 20 employees.

The same section’s Q&A-4 excepts small-employer plans, church plans and governmental plans from COBRA, and notes that state and local government plans are generally subject to parallel requirements under the Public Health Service Act. Q&A-5(g) states that a plan that was subject to COBRA and later becomes a small-employer plan stays obligated for qualifying events that occurred while it was subject. The DOL’s COBRA topic page (retrieved 14 Oct 2026) summarises the rule as applying to group health plans sponsored by employers with 20 or more employees in the prior year.

Qualifying events and qualified beneficiaries

29 U.S.C. 1163 (retrieved 14 Oct 2026) lists six qualifying events that would otherwise cause a loss of coverage: death of the covered employee; termination (other than for gross misconduct) or reduction of hours; divorce or legal separation; the employee becoming entitled to Medicare; a dependent child ceasing to be a dependent under the plan’s generally applicable requirements; and a title 11 proceeding for the employer from whose employment the employee retired. 29 U.S.C. 1167 (retrieved 14 Oct 2026) defines a qualified beneficiary as the spouse or dependent child who was a beneficiary the day before the event, plus a child born to or placed for adoption with the covered employee during continuation coverage; for termination or reduced hours the covered employee is also a qualified beneficiary. Section 1167(4) applies the leased-employee and controlled-group rules of IRC 414(n) and 414(t) for this part.

Maximum coverage periods

29 U.S.C. 1162(2)(A) (retrieved 14 Oct 2026) sets the minimum period: 18 months after a termination or reduction in hours; 36 months after the date of that event if a second qualifying event (other than the bankruptcy event) occurs within the 18 months; 36 months after other events such as divorce, a child ceasing to be a dependent, or the employee’s death; and a special rule for the bankruptcy event. A qualified beneficiary determined under Social Security Act title II or XVI to have been disabled at any time during the first 60 days of coverage has the 18 months treated as 29 months for all qualified beneficiaries, but only if notice of the determination is given before the end of the 18 months. The section also states that when termination or reduced hours occurs less than 18 months after the employee became entitled to Medicare, coverage for beneficiaries other than the employee does not end before 36 months from that entitlement. Clauses (v) and (vi), on certain PBGC and TAA-eligible individuals, are stated not to require coverage past January 1, 2014. Coverage may end earlier for the reasons listed in the statute: the employer ceases to provide any group health plan, a premium is not timely paid, the beneficiary becomes covered under another group health plan or entitled to Medicare after the election (subject to the statute’s conditions), or a disability ends.

Notice duties and deadlines

General notice: 29 CFR 2590.606-1 (as of 1 Oct 2026, retrieved 14 Oct 2026) requires the plan administrator to give each covered employee and spouse written notice of the right to continuation coverage not later than the earlier of 90 days after coverage begins (or, if later, 90 days after the plan first becomes subject to the requirements) or the first date the administrator must send the election notice. Paragraph (c) lists required content, (d) permits a single notice to an employee and a co-resident spouse, and (e) allows the content to sit in a summary plan description.

Employer to administrator: 29 CFR 2590.606-2 (retrieved 14 Oct 2026), implementing 29 U.S.C. 1166(a)(2), requires the employer to notify the administrator of the covered employee’s death, termination (other than for gross misconduct), reduction in hours, Medicare entitlement, or the employer’s title 11 proceeding. The deadline is not later than 30 days after the qualifying event occurred, or, where the plan provides under ERISA section 607(5) that coverage and the notice period start on the date of loss of coverage, not later than 30 days after the date coverage is lost. Multiemployer plans may allow longer. The notice must give enough information to identify the plan, the employee, the event and its date.

Employee or beneficiary to administrator: 29 CFR 2590.606-3 (retrieved 14 Oct 2026) covers divorce or legal separation, a child ceasing to be a dependent, a second qualifying event and disability determinations. Plan time limits for these may not end before 60 days after the latest of the event, the loss of coverage, or the date the individual was informed of the procedures; the limit for notice that a disability has ended may not end before 30 days after the later of the final determination or being informed. The plan must set reasonable procedures described in its summary plan description.

Administrator to qualified beneficiaries: 29 CFR 2590.606-4(b) (retrieved 14 Oct 2026) requires the election notice not later than 14 days after the administrator receives notice of the qualifying event. Where the employer is also the administrator and must itself give notice of an event, the election notice is due not later than 44 days after the event (or after the loss of coverage under a date-of-loss plan). 29 U.S.C. 1166(c) states the 14-day rule. Paragraph (c) requires an explanation to anyone found not entitled to coverage, and (d) requires notice as soon as practicable when coverage ends early.

Election and payment windows

29 U.S.C. 1165(a) (retrieved 14 Oct 2026) defines the election period as one that begins not later than the date coverage terminates, lasts at least 60 days, and ends not earlier than 60 days after the later of that date or the date of the election notice. An election by the covered employee or a spouse qualified beneficiary is deemed to include other qualified beneficiaries unless the election says otherwise, and beneficiaries may select separately among available coverage types. For payment, 29 U.S.C. 1162(3) (retrieved 14 Oct 2026) states the plan may not require any premium before the day 45 days after the initial election, and 1162(2)(C) treats a premium as timely if made within 30 days after the due date or any longer period the plan allows.

Who pays and the 102 percent cap

The plan may require payment of a premium for continuation coverage; under 29 U.S.C. 1162(3) (retrieved 14 Oct 2026) the premium may not exceed 102 percent of the applicable premium for the period and may be paid in monthly installments at the payor’s election. For the disability extension, the statute substitutes 150 percent for months after the 18th. 29 U.S.C. 1164 (retrieved 14 Oct 2026) defines the applicable premium as the cost to the plan of coverage for similarly situated beneficiaries without a qualifying event, regardless of who pays it, determined for a 12-month period before it begins. The DOL’s COBRA page (retrieved 14 Oct 2026) likewise states that individuals may be required to pay up to 102 percent of the plan’s cost. Whether the employer or the individual bears the cost beyond that is a plan-terms question we did not find a federal rule on.

Self-funded, level-funded and outsourced administration

The statute speaks to funding in one place we read: 29 U.S.C. 1164(2) (retrieved 14 Oct 2026) says that for a self-insured plan the applicable premium is a reasonable actuarial estimate of the cost of coverage for similarly situated beneficiaries, or, if the administrator elects and there is no significant change, the prior period’s cost adjusted by a stated price index. 29 U.S.C. 1167(1) defines a group health plan as one providing medical care “directly or through insurance, reimbursement, or otherwise,” so the duties are not limited to insured plans. The sources we read assign the notice duties to the employer and the plan administrator and do not address how a third-party administrator, stop-loss carrier or professional employer organisation divides them. That allocation is a contract question for counsel; we state no federal rule on it.

State continuation coverage

We read no state agency or state statute page for this guide, so we state no state continuation rule. Employers with state-regulated insured plans should ask counsel whether a state program applies in addition to federal COBRA.

Where this sits: the general COBRA notice may be placed in the summary plan description, whose timing and the other plan documents and annual reporting duties are in the ERISA and Form 5500 guide.

Where this sits: a health FSA and its use-or-lose and carryover rules, and how an HSA differs from it, are covered in the Section 125, HSA and FSA guide.

What we could not confirm

The DOL EBSA employer guide PDF and the EBSA COBRA law page returned HTTP 403 to our fetch; the DOL topic page was read through a summarising fetch, so only short extracted phrases are attributed to it. We did not read IRC 4980B, 26 CFR 54.4980B-6 to 54.4980B-8 (election, payment and coverage-period detail), the model notices, current civil-penalty or excise-tax amounts, ARRA/ACA-era subsidy rules, or any state law. Statute text came from Cornell LII, not the official U.S. Code site. Verify against the official text before relying on any detail.