COBRA vs. state continuation laws – Are you compliant?

By Chris Noffke, GBDS

Noncompliance with the Employee Retirement Income Security Act (ERISA) and Department of Labor (DOL) laws and incorrectly administering employee benefits are common occurrences—especially when it comes to continuation of benefits. But, they’re mistakes that can have a costly impact.

At $100 per employee or $200 per family per day of non-compliance, fines by DOL can add up quickly. Groups may also be subject to a maximum of a $500,000 statutory fine if they are found in violation due to reasonable cause or willful neglect. So knowing which rules to follow is important, as well as when to provide written notice to eligible employees.

If a practice has 20 or more employees, it must follow the federal Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA requires a notice once a qualifying event occurs to be provided no later than 14 days after being notified of the qualifying event.

If a practice follows state continuation guidelines, it must provide state continuation coverage notices and information to the employee, spouse and dependents within five days of the employee’s loss of coverage.

Examples of qualifying events that require a notice include the following:

  • Termination of employment (voluntary or involuntary).
  • Reduction in hours of the employee.
  • Death of the covered employee.
  • Employee becoming entitled to Medicare.
  • Divorce or legal separation of the spouse from the covered employee.
  • Loss of dependent child status.
  • Birth of a child, adoption or marriage.

After the notice is sent to the employee, there are different time limits for the employee and dependents to respond based on the laws. COBRA gives 60 days from loss of group benefit date to enroll in CORBA benefits, while state continuation allows 30 days. Once enrolled, members qualify for 18 months of continued benefits. If your group follows COBRA, eligible members may be able to extend the continuation period another 18 months if a qualified beneficiary has a new qualifying event or if a covered member becomes disabled. This could qualify a COBRA participant for up to 36 months of coverage.

These are just a few of the regulations to be aware of when it comes to administering COBRA and state continuation benefits. If you are concerned whether you are administering these and other employee benefits correctly, your partners at Wisconsin Medical Society Insurance can work with you and your employees to help guide you through the process. Contact us today at or call 866.442.3810 for more information.

The views and opinions expressed in this blog are solely those of the author and do not necessarily represent the views of the Wisconsin Medical Society, Wisconsin Medial Society Holdings Corporation or its subsidiaries. Nothing in this blog should be construed as legal, financial or clinical advice.

Christopher Noffke, GBDS, Insurance Advisor

Christopher has over 10 years of experience in group insurance sales and retention, including six years on the health insurance carrier side. A graduate of the University of Nebraska, Chris has completed the National Association of Health Underwriters Voluntary/Worksite Certification and holds a Group Benefit Disability Specialist (GBDS) designation.

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