COBRA after a layoff: what employers must do, and by when

Federal COBRA lets employees who lose group health coverage after a layoff keep it, at their own cost, for up to 18 months. It generally applies to private-sector employers with 20 or more employees. The employer must tell the plan within 30 days of the layoff, the plan must send an election notice within 14 days after that, and each person gets at least 60 days to decide. The premium can’t exceed 102% of the plan’s cost.

The timeline

Step	Who	Deadline
Qualifying event: termination or reduction in hours	Employer	Day 0
Notify the group health plan	Employer	Within 30 days
Send the election notice to qualified beneficiaries	Group health plan	Within 14 days of being notified
Elect coverage	Each qualified beneficiary	At least 60 days, from the later of losing coverage or receiving the notice
Coverage period after termination or reduced hours		Up to 18 months
Maximum premium		102% of the plan’s cost

Checklist for the layoff date

1. Confirm who is covered: employees, and their spouses and dependents on the plan.
2. Notify the plan or administrator in writing within 30 days.
3. Check the election notices go out with the right dates and premiums.
4. Keep copies of every notice and the dates sent; disputes often turn on proof of notice.

If the company is closing

Closing raises extra questions about what happens to the plan itself and any state continuation coverage. Talk to the plan administrator and a benefits lawyer before the final payroll. The shutdown data checklist lists the other people steps.