Regulatory compliance seems to get more complicated every year. In fact, a recent study shows that nearly one in three small businesses spend more than 80 hours a year on existing federal regulation. Throw in the uncertainty of any new changes coming with the new presidential administration and you’ve got yourself a real headache!

Luckily, you don’t have to tackle those issues alone. When you partner with industry experts and vendors, some of that pressure is relieved.

Another step you can take to achieve compliance is educating yourself. If you have 20 or more employees, this is for you.

COBRA is a federal law that stands for Consolidated Omnibus Budget Reconciliation Act. Under COBRA, employers with 20 or more employees who offer health care benefits must offer the option of continuing this coverage to individuals who would otherwise lose their benefits. This could be due to termination of employment, reduction in hours or certain other events.

[Please note that individual states may also have specific state continuation requirements.]

Companies like Marriott, Wal-Mart and BB&T Co. have come under fire recently for COBRA notification requirement lawsuits. To make sure this doesn’t happen to you, take a look at the following refresher.


Businesses with 20 employees or more that sponsor a health plan are required to provide employees with an initial notice and additional notices in the occurrence of a qualifying event.

The initial notice:

Informs the employees and his/her beneficiaries of the availability of continuation coverage (if a qualifying event occurs) and the rights and obligations of COBRA coverage.

Must be provided within 90 days of the date the employee’s group health plan coverage began or the date the plan became subject to COBRA.

The election notice:

Must be given to employees within 14 days of the plan administrator’s receipt of notice of the qualifying event or within 44 days of the date the qualifying event occurred (if the employer is also the plan administrator).

Must include several specific items. You can find a great example from the DOL here.

  • Name and contact for the plan and plan administrator
  • Explanation of the qualifying event
  • Identification of who is entitled to coverage
  • Plan termination date unless continuation coverage is elected
  • Who may elect coverage, how they may elect it and when they must elect it
  • Details of consequences of failing to elect or waiving continuation coverage
  • Description of available continuing coverage and availability date and possible continuation coverage extensions
  • Payment and cost information
  • Statement regarding keeping plan administrator informed of current addresses for all qualified beneficiaries
  • Specific information for qualified beneficiaries for qualifying events that result in coverage offered for less than 36 months

Want to know a simple way that your business can stay compliant and avoid hefty fines or lawsuits? Partner with PrimePay. You can earn COBRA compliance in three steps. This means all you're required to do is:

  1. Let us know of your new plan participants.
  2. Notify us of qualifying events.
  3. Run some reports once a month.

Click here to learn more and get started today!

Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.  Consult your own legal advisor regarding specific application of the information to your own plan.