COBRA Notice Failures: The Penalty Risk Hiding in Your Offboarding Process

COBRA litigation is rarely about coverage. It is almost always about notice.

Employers tend to think of COBRA as a coverage question — who is eligible, for how long, at what premium. The rules there are well settled and rarely disputed. The exposure sits somewhere less obvious: whether you can prove the right notice went to the right person at the right time.

The two notices that matter

The general notice

Provided within 90 days of coverage beginning, this tells participants their COBRA rights exist. It is easy to overlook precisely because it happens at the start of coverage, far from any qualifying event, and often during onboarding when attention is elsewhere.

The election notice

Provided within 14 days of the plan administrator being notified of a qualifying event. This is the one that generates litigation — a separated employee who says they never received it, and an employer who cannot demonstrate otherwise.

Where the process actually breaks

• The termination never reaches the administrator. A manager processes a separation, payroll is updated, and the benefits notification lags by weeks. The 14-day clock started anyway.
• The address is stale. Notices go to the last address on file. If that was never updated, the mailing may be technically compliant and practically useless.
• A dependent event is missed entirely. Divorce, legal separation, or a child aging out at 26 are qualifying events for dependents — and unlike a termination, nothing in your HR system announces them.
• No record of what was sent. Generic assurance that “we always send them” is not evidence. Dated records tied to individuals are.

Who can elect, and for how long

Employees may elect COBRA if they would otherwise lose coverage because they quit, were terminated for any reason other than gross misconduct, or had hours reduced below full-time eligibility. Coverage continues up to 18 months in those cases, and up to 36 months where the loss resulted from other qualifying events.

Dependents may elect independently following the death of the covered employee, an adult child turning 26, divorce or legal separation, or the covered employee becoming eligible for Medicare. Independent election rights mean independent notice obligations.

Five questions to test your process

1. How many days pass between a termination being processed and the administrator being notified — on average, and at worst?
2. Can you produce the election notice sent to a specific former employee on a specific date?
3. What triggers a notice when a dependent ages out, rather than when an employee leaves?
4. Who reconciles premium payments and issues the grace period and termination notices?
5. If your administrator declines a filing or misses a deadline, who is legally responsible? (It is you.)