COBRA Continuation Coverage Explained for Employers

When employees leave your company or reduce their hours, they don't just lose their paycheck—they lose their health insurance too. For many workers, especially those with families or ongoing medical needs, this creates a scary gap in coverage. COBRA continuation coverage bridges that gap, and as an employer, understanding how it works protects both your business and your departing employees.

What COBRA Coverage Actually Is

COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that gives employees the right to temporarily continue their group health insurance after certain qualifying events. Think of it as a safety net that lets departing employees keep the same coverage they had while working, though they'll pay the full premium themselves.

The key word here is "continuation"—employees aren't getting new insurance, they're continuing the exact same plan they had as active employees. Same doctors, same networks, same benefits. The only thing that changes is who pays the bill.

How COBRA Works Step by Step

Here's the process from start to finish: First, a qualifying event occurs—an employee quits, gets terminated, reduces hours, or experiences other triggering events like divorce or a dependent aging out of coverage. You, as the employer, must notify your plan administrator within 30 days of the event.

Next, the plan administrator sends an election notice to the qualified beneficiary, giving them 60 days to decide whether to elect COBRA coverage. If they choose continuation coverage, they have 45 days to make their first premium payment, and coverage is retroactive to the date their original coverage ended.

Once enrolled, employees can keep their coverage for 18 to 36 months, depending on the qualifying event. Job loss or hour reduction typically allows 18 months of coverage, while events like divorce or Medicare entitlement can extend coverage up to 36 months for certain family members.

Why Smart Employers Embrace COBRA

Offering robust COBRA administration isn't just about legal compliance—it's a competitive advantage. When employees know they won't face immediate coverage gaps if they need to leave, they feel more secure in their roles. This security translates to better focus on work and stronger loyalty to your company.

From a practical standpoint, proper COBRA handling also protects your reputation in your industry. Long Island's professional community is tight-knit, and how you treat departing employees gets noticed. Former employees who receive clear COBRA guidance and support are more likely to speak positively about your company and potentially return in the future.

Additionally, compliance failures can be expensive. COBRA violations can result in significant penalties and legal complications that are easily avoided with proper administration.

What Employees Really Get

For your employees, COBRA provides peace of mind during life transitions. A dental office hygienist who's pregnant can leave for a better opportunity without worrying about maternity coverage gaps. An accounting firm associate can take time off for family reasons knowing their family's health coverage continues seamlessly.

The coverage is identical to what they had as active employees—same deductibles, same provider networks, same prescription benefits. This continuity is especially valuable for employees with ongoing medical treatments or family members with chronic conditions who can't afford to switch providers or plans.

While employees pay the full premium cost, this is often still less expensive than individual market alternatives, and the coverage is typically much more comprehensive than short-term health plans.

Key Implementation Considerations

COBRA administration involves strict timelines and detailed documentation requirements. Missing a 30-day notification deadline or sending incorrect information can create compliance problems and leave your former employees without coverage options.

Many employers find that partnering with experienced benefits administrators ensures nothing falls through the cracks. Professional administration also means your HR team can focus on current employees rather than managing complex continuation coverage rules.

Consider how you'll handle premium collections, coordinate with your insurance carriers, and maintain accurate records for potential audits. These operational details matter significantly for smooth COBRA administration.

How Benton Oakfield Simplifies COBRA for Long Island Employers

At Benton Oakfield, we handle COBRA administration so you don't have to worry about missed deadlines or compliance failures. We manage all notifications, premium collection, and ongoing communication with qualified beneficiaries, ensuring your former employees understand their options and your business stays compliant.

Our team knows the specific challenges Long Island professional service firms face, from seasonal staffing changes at accounting practices to maternity leave transitions at medical offices. We provide the expertise and attention to detail that keeps your COBRA program running smoothly while you focus on growing your business.

Ready to ensure your employees have seamless coverage transitions? Contact our team to learn how we can streamline your benefits administration and give both you and your employees greater peace of mind.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This guide is for educational purposes only. Please contact your Benton Oakfield representative to discuss how this applies to your specific situation.

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