COBRA has been an administrative challenge for employers dating back to 1986 when it first became effective. On the surface, it’s easy to comprehend COBRA and its purpose, but behind the scenes, an employer has a lot of obligations it must account for to ensure compliance with the law. Take this scenario for example:

Mary works for ABC Company and is covered by their group health plan which is subject to COBRA. On March 5^th, Mary terminates her employment with ABC Company. Based on the organization’s policy, Mary will be allowed to continue coverage under the group health plan until the end of the month at which point she will lose coverage. On March 12^th, Mary is sent a COBRA Election Notice which gives her the right to continue coverage at her own expense for up to 18 months. The COBRA Election Notice explains that Mary has up to 60 days to elect COBRA.

The underlying question is when does the 60-day clock start ticking? Is it March 5^th when Mary’s employment was terminated? Is it March 12^th when the COBRA Election Notice was sent? Or is it March 31^st when Mary’s group health plan coverage terminates?  

The COBRA regulations indicate that there is no qualifying event until there is a loss of coverage. While termination of employment occurred on March 5^th, the qualifying event date is March 31st because ABC Company provides coverage through the end of the month. Furthermore, the COBRA regulations state that the 60-day election period starts on the date of the qualifying event or the date the COBRA Election Notice is sent, whichever is later.

In this example, the COBRA Election Notice was sent on March 12^th. The qualifying event date is March 31^st since that is the loss of coverage date. March 31^st is the later of the two dates, and therefore the 60-day clock starts ticking from that date.

Mary should be given the option to elect COBRA up until May 30^th in this example. Mary will be responsible for paying the entire premium plus an administrative fee of up to 2%. Premium payments will be required retroactively to April 1^st should Mary elect COBRA coverage.     

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