Who's responsible for COBRA compliance anyway?
- Claire Baker
- Feb 15
- 2 min read
COBRA isn’t real, like Santa Claus and the Tooth Fairy.
I’m not saying that companies don’t have to follow the law.
I’m just saying that there isn’t a basket of COBRA snakes in Washington, DC administering your health insurance like the IRS administers taxes.
I mean, there is a basket of snakes in Washington, but that’s not what I’m talking about. Focus.
COBRA is more like the Christmas elves at the North Pole. It's a heuristic for the decisions your business-mommy and business-daddy are making to decide what insurance options you’ll find under the insurance tree this layoff season.
Enough with the strained metaphors. What I’m saying is that your employer has some discretion about COBRA administration.
They do have to follow the law, but the group gets to decide how that happens. And they have a lot of leeway in those decisions.
For example:
🪓 When does your healthcare end?
When your health insurance ends is determined by your insurance plan, not the law. Most plans end with the month, but some end on the last day of work.
It’s not uncommon for a company to decide to keep a plan active as part of severance.
The insurance company doesn’t police it. They’re not gonna turn down the money.
Employees often don’t turn down free healthcare.
That’s why you sometimes see companies forget to take someone off the plan until it’s caught at the next open enrollment. Then it's a mess.
📃 Enrollment
Most people don’t realize that when you enroll in COBRA, you’re actually taken off the employee plan and re-enrolled separately. This step is usually invisible, since COBRA enrollees are subject to many of the same compliance regulations, keep their progress toward their deductible, and use the same membership card.
But it matters when there’s a qualifying event.
If your company offers a COBRA subsidy as part of severance
and they do the enrollment switch at the beginning of your subsidy
and you turn down a new job’s health insurance plan before your COBRA subsidy runs out
you could be stuck paying COBRA premiums for the rest of the old company's plan-year.
It always sucks when that happens. Every time.
💸 Payment processing
The insurance company invoices your (former) employer for your plan whether you’re on payroll or not. COBRA is just the law that sets expectations for how you pay them back.
It’s a pain, because most businesses aren’t set up to accept direct payments from people who aren’t customers. Usually, they deduct employees' portion of premiums from their paychecks.
But if there’s no paycheck, they just... what? Venmo?
That’s why most companies hire a standalone service to take care of mailing disclosures, managing enrollments, and processing payments. If your company doesn’t have one yet, you should talk to Kept.
Lesson
If you got coal in your metaphorical COBRA stocking, don’t let them gaslight you by blaming the government. There’s no one making a list and checking it twice to see what employers are naughty or nice.
It’s up to you to call them on their BS.
Did you just realize you've been doing COBRA wrong this whole time? It's okay. You're not the first. If you want to talk about what other compliance boogeymen you don't need to be afraid of, we should talk.
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