COBRA Deadlines and Penalties: What Employers Cannot Afford to Miss

COBRA compliance is unforgiving. The deadlines are strict, the penalties are steep, and the IRS and Department of Labor actively enforce them. A single missed notice can expose your business to thousands of dollars in penalties — and potential lawsuits from former employees.

This guide focuses specifically on the deadlines and penalties that matter most.

The COBRA Notice Timeline

Understanding COBRA compliance starts with understanding the notice timeline. There are multiple notices required at different points in the COBRA process.

1. Initial (General) Notice

When: Within 90 days of an employee (or dependent) becoming covered under the plan Who receives it: Employee and spouse What it covers: General information about COBRA rights Penalty for failure: Up to $110/day per qualified beneficiary

This notice is often overlooked because it's required at enrollment — not at termination. Many employers only think about COBRA when someone leaves, missing this initial requirement entirely.

2. Qualifying Event Notice (Employer to Plan Administrator)

When: Within 30 days of the qualifying event Who sends it: Employer What triggers it: Termination, reduction in hours, death, Medicare entitlement

3. Election Notice (Plan Administrator to Qualified Beneficiaries)

When: Within 14 days of receiving the qualifying event notice from the employer Who receives it: All qualified beneficiaries What it covers: Right to elect COBRA, coverage details, premium amounts, election deadline Penalty for failure: Up to $110/day per qualified beneficiary

The election notice is the most critical COBRA document. It must contain specific information required by the DOL's model notice regulations.

4. Notice of Unavailability

When: Within 14 days of receiving a qualifying event notice When required: When the plan administrator determines the individual is not entitled to COBRA Penalty for failure: Up to $110/day

5. Notice of Early Termination

When: As soon as practicable after COBRA coverage terminates early When required: When COBRA coverage ends before the maximum period (e.g., due to non-payment or new coverage)

The Election Period

Qualified beneficiaries have 60 days to elect COBRA — measured from the later of:

• The date coverage is lost, or
• The date the election notice is sent

This 60-day window is non-negotiable. Employers cannot shorten it, and failure to provide the election notice on time effectively extends it.

Premium Payment Deadlines

Once COBRA is elected:

• First premium: Due within 45 days of election
• Subsequent premiums: Due on the date specified in the plan (typically the first of the month)
• Grace period: 30 days for all premium payments

Important: Employers cannot terminate COBRA coverage for non-payment until the grace period has expired. Terminating coverage prematurely is a compliance violation.

Maximum Coverage Periods

Qualifying Event	Maximum Coverage Period
Termination / Reduction in hours	18 months
Disability (SSA determination within 60 days)	29 months
Divorce / Legal separation	36 months
Death of covered employee	36 months
Medicare entitlement	36 months
Dependent aging off plan	36 months
Second qualifying event during COBRA	36 months

Penalties Summary

Violation	Penalty
Failure to provide required notice	Up to $110/day per qualified beneficiary
ERISA civil penalty (DOL enforcement)	Up to $110/day per qualified beneficiary
Excise tax (IRS enforcement)	$100/day per qualified beneficiary ($200/day for unintentional failures affecting multiple beneficiaries)
No cap on total penalties	Penalties accrue until corrected

In addition to government penalties, employers can face civil lawsuits from qualified beneficiaries who were harmed by COBRA non-compliance — including claims for medical expenses they incurred because they didn't have coverage.

The Most Common COBRA Violations

1. No initial notice at enrollment — The most commonly missed requirement
2. Late election notices — Missing the 44-day window (30 days employer + 14 days administrator)
3. Incorrect premium amounts — Charging less than 102% of the full plan cost
4. Premature termination — Ending coverage before the grace period expires
5. No process for dependent qualifying events — Divorce, disability, and aging-off events require employee notification to the plan administrator within 60 days

Outsourcing COBRA Administration

Given the complexity and liability involved, many employers outsource COBRA administration to a third-party administrator (TPA). A good TPA:

• Tracks qualifying events and sends notices automatically
• Manages premium collection and grace periods
• Maintains documentation for audit purposes
• Stays current with regulatory changes

Our sister service, COBRA Shield Pro, provides full-service COBRA administration for employers of all sizes. We handle every aspect of COBRA compliance so you don't have to worry about missing a deadline.

Contact us to learn more about COBRA administration solutions.

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Anderson Financial Group provides independent employee benefits consulting. COBRA Shield Pro is a specialized COBRA administration service. This article is for informational purposes and does not constitute legal advice.