Does COBRA Apply to Small Business? How to Count
Federal COBRA reaches employers that normally had 20 or more employees last year. How the count really works, and what applies when it does not.
A founder called me the week after letting two people go, wanting to know whether he had just broken a federal law. He had read that COBRA starts at twenty employees, he had seventeen people on payroll that morning, and he had sent nobody anything. He wanted a yes or a no.
The honest answer took twenty minutes, because his question contained three separate mistakes. The threshold is not measured today. It is not measured in whole people. And it is not measured at his company alone, because he owned a second entity with nine employees in it. Once we counted the way the regulation actually requires, he had been subject to federal COBRA for the entire year without knowing it.
COBRA, the Consolidated Omnibus Budget Reconciliation Act, lets people keep their group health coverage after events such as a job loss or a cut in hours. Whether it reaches your business looks like a simple size test but works like an arithmetic problem with four moving parts, and almost every summary skips that part.
Below is how the count works, what happens in the year you cross the threshold and the year you fall back under it, how state continuation laws differ, and what you owe departing employees when neither regime reaches you. I build the people and records tooling for businesses without an HR department at FirstHR. This is general information rather than legal or benefits advice.
The Short Answer, and Why It Is Not a Headcount
Federal COBRA applies to your group health plan only if you normally employed 20 or more employees during the preceding calendar year. If you were below that, your plan is a small-employer plan and it is excepted from federal COBRA for the whole of the current year, no matter what your headcount does in the meantime.
The statute itself is one sentence long. Under 29 U.S.C. 1161(b), the continuation coverage requirements do not apply to a group health plan for any calendar year if all employers maintaining the plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year. Everything difficult about this rule lives inside two words, normally and employers.
Notice the shape of it. Your status for this year was decided last year, and it cannot change until January. That helps, because you can answer the question once, in writing, and rely on the answer for twelve months. It also means an employer who has never done the count is running blind for a full year at a time.
Being outside federal COBRA is not the same as owing nothing. It is the beginning of a second question about state law, and in some states the answer is more generous to the employee than the federal rule would have been.
How the Twenty Are Actually Counted
You count every full-time and part-time common law employee (a worker whose job you direct and control) across the preceding calendar year, with part-timers converted into fractions. You are outside federal COBRA only if the total was under 20 on at least half of your typical business days.
The mechanics sit in 26 CFR 54.4980B-2, and they are more specific than most employers expect.
Start with the basis. You may determine the number of employees on a daily basis or on a pay period basis. Whichever you choose has to be used for all employees and for the entire year being measured. Picking the basis that flatters you and switching later is not an option the regulation offers.
On a daily basis, you take the actual number of full-time employees on each typical business day, plus the actual hours worked by each part-timer that day. On a pay period basis, you use the pay period totals and then apply the resulting figure to each day of that period. Most small employers find the pay period version far easier, because payroll already holds the hours.
Then the fractions. Each full-time employee counts as one. Each part-time employee counts as a fraction whose numerator is the hours that person worked and whose denominator is the hours your business requires for full-time status. The denominator comes from your own employment practices, with a hard ceiling: it can never exceed eight hours for any day or 40 hours for any week.
That ceiling closes the obvious escape route. An employer who defines full-time as 50 hours a week cannot use 50 as the denominator and shrink everybody. For this count, 40 is the most you may ever divide by, which makes part-time hours count for more than employers assume.
14 full-time employees, 40 hours a week 14 x 1.0 | 14.0 |
6 part-timers at 24 hours a week 6 x (24 / 40) | 3.6 |
5 part-timers at 20 hours a week 5 x (20 / 40) | 2.5 |
2 owners taking guaranteed payments, not on payroll excluded as self-employed | 0.0 |
3 contractors on 1099 excluded as independent contractors | 0.0 |
2 outside board members excluded as directors | 0.0 |
Count for this pay period | 20.1 |
Now the exclusions, which cut the other way. Three categories of person are left out of the count even though they may well be covered by your plan: self-employed individuals within the meaning of section 401(c)(1), independent contractors along with their own employees and contractors, and directors of a corporation.
This matters for partnerships, and for LLCs taxed as partnerships, where the owners take draws or guaranteed payments rather than wages. Those owners can be plan participants and still not appear in the count. It also means a business that leans heavily on contract labor may sit comfortably below the threshold on paper while looking much larger from the outside.
The last step is the day test, and the line sits at exactly half. You normally employed fewer than 20 only if the count was under 20 on at least 50 percent of your typical business days.
A summer surge that puts you over for three months leaves you outside federal COBRA. The same surge stretched across seven months does not, which is a real risk for anyone whose part-time staffing swells for most of a year.
Run your own year through three steps rather than through a memory of how many people were on the payroll. The worksheet below fixes the basis and the full-time standard first, converts each period once, and totals the days on each side of 20 at the end.
| A | B | |
|---|---|---|
| 1 | Item | Your entry |
| 2 | Calendar year being measured, which is the preceding year | |
| 3 | Basis used for every employee for the whole year, daily or pay period | |
| 4 | Hours this business requires for full-time status | |
| 5 | Denominator applied, never above 8 hours a day or 40 a week | |
| 6 | Entities included, meaning every business under common ownership | |
| 7 | Any successor entity from a merger or asset purchase | |
| 8 | People left out: self-employed, independent contractors and their workers, directors | |
| 9 | Prepared by | |
| 10 | Date completed |
Common Ownership Changes the Answer
The employer for COBRA purposes is not only the entity that signs the paychecks. It includes every other member of a controlled group of corporations, a group of trades or businesses under common control, or an affiliated service group, plus any successor to those entities. Employees across the whole group are added together.
The regulation makes the point with a blunt example. A corporation employs twelve people, all of them working and residing in the United States, and maintains a group health plan for them.
That corporation is a wholly owned subsidiary of a parent, and in the previous calendar year the controlled group including both companies employed more than nineteen people, even though the only United States workers in the group are those twelve. The plan is not a small-employer plan. Foreign corporations are not excluded from the controlled group, so the whole group counts.
For small businesses the common versions of this are less exotic and just as decisive. Two operating companies with the same owners. A holding company with three restaurants under it. A professional practice and a separate management entity. In each case the instinct is to count the entity that maintains the plan, and in each case that instinct produces the wrong answer.
Multiemployer plans, which more than one unrelated employer contributes to, run on their own version of the rule. Such a plan is a small-employer plan only where each contributing employer normally employed fewer than 20 in the preceding year, and the status can change mid-year.
If a plan stops being excepted because a large employer joins during the year, the exception ends immediately on the addition. If it stops being excepted because an existing contributing employer grew, the change waits until the following January 1.
The Year You Cross the Line, and the Year You Fall Back Under
Crossing 20 during a calendar year does not make your plan subject to federal COBRA that year. The test looks backward, so growth attaches COBRA on the following January 1 only if the count was 20 or more on more than half of that year’s typical business days. Whatever remains of the growth year is your time to prepare.
That lead time is the single most useful feature of the rule, and almost nobody uses it. Between the month you cross and the January it bites, you need an administrator appointed, a general notice ready for every covered employee and spouse, an election notice template, a premium collection process, and a trigger in your offboarding that fires on every departure and every reduction in hours.
| What happened last year | Federal COBRA this year | What you should be doing |
|---|---|---|
| Under 20 on at least half of typical business days | Does not apply to your plan | Confirm your state continuation rule and who administers it |
| 20 or more on more than half of typical business days | Applies for the whole year | Full COBRA administration: notices, elections, premiums, records |
| Crossed 20 only after half the year’s typical business days had passed, and stayed there | Does not apply until January 1 next year | Use the remaining months to appoint an administrator and prepare notices |
| Fell back under 20 after a year of being subject | Does not apply to new qualifying events | Keep serving anyone whose event occurred while the plan was subject |
| First calendar year of the business | No preceding year to fail the test | Track the count from day one, because it decides next January |
| Bought a business or restructured | Depends on the successor and controlled group analysis | Count the whole group, then get the conclusion reviewed |
The reverse direction is where employers create liability without meaning to. A plan that has been subject to COBRA and then becomes a small-employer plan remains subject to COBRA for qualifying events that occurred while it was subject. Shrinking below the threshold does not cancel obligations already running.
The regulation walks through it. An employer with 20 employees on more than half its working days in one year is subject to COBRA the next year. An employee resigns at the end of January of that year and elects continuation coverage.
The employer then drops to nineteen for the rest of the year, so the plan is not subject to COBRA in the year after. The plan must nevertheless keep making continuation coverage available to that former employee, potentially all the way to the eighteen month mark, which lands well inside the year when the plan was otherwise excepted.
The same logic runs to 36 months for a divorced spouse who elected while the plan was subject. And the boundary cuts both ways: a dependent child who ages out during a year when the plan is excepted gets no COBRA rights at all, and does not acquire them later if the plan becomes subject again.
State Continuation Is Not a Smaller COBRA
Many states require insurers to offer continuation of group coverage to people losing it at employers below the federal threshold (Department of Labor), and those laws differ from federal COBRA far more sharply than the nickname mini-COBRA suggests. Duration is the widest gap, running from a handful of months in some states to a full 36 in others.
| State | How long continuation runs | Key condition |
|---|---|---|
| California | 36 months from the date coverage would otherwise end | Applies to insured groups of 2 to 19 employees; self-insured plans are not eligible |
| New York | 36 months total, at up to 102 percent of the group premium | Small and large employers alike, extending federal COBRA where it applies, whatever the reason coverage ended |
| Massachusetts | 18, 29, or 36 months depending on the event | Small group plans issued to employers with 2 to 19 employees; enforced by the Division of Insurance |
| Illinois | 12 months | Requires three months of continuous prior coverage; the right ends when the group policy itself ends |
| Virginia | 12 months, at the current rate plus an administrative fee capped at 2 percent | Requires continuous coverage under the group policy for the three months before eligibility ended |
| Texas | 9 months, plus 6 more after federal COBRA ends where both apply | Requires coverage for the three months before the job ended |
Read the third column as carefully as the second. Illinois, Texas, and Virginia each require three months of continuous coverage before eligibility ends, so a person who enrolled six weeks before leaving may not qualify at all. Illinois also ties the right to the policy (215 ILCS 5/367e), which means an employer that closes and drops the group plan can leave nobody with anything to continue.
New York sits at the generous end. Continuation there runs 36 months at up to 102 percent of the premium and reaches anyone who loses eligibility for essentially any reason (New York Department of Financial Services). An employer who assumes state law must be a weaker version of the federal rule will be wrong there by a wide margin.
California's version carries a name of its own, Cal-COBRA, and it borrows the federal counting structure. It reaches employers that employed 2 to 19 eligible employees on at least 50 percent of their working days during the preceding calendar year (California Insurance Code section 10128.51).
Cal-COBRA caps the premium at 110 percent of the applicable rate (section 10128.56), and it also extends federal COBRA. Section 10128.59 continues someone who exhausts federal COBRA to a total of 36 months.
The California Department of Insurance says that extension needs a master policy issued in California, or an employer with its principal place of business and at least 51 percent of its employees in the state.
State rules vary widely, and some policies fall outside them altogether. That is not a reason to guess. Your carrier knows which rule applies to your policy, and asking is a single email that takes the question off your desk permanently.
Who Administers It, and What Fully Insured Really Means
State continuation laws regulate insurance carriers rather than employers, so on a fully insured plan the carrier normally administers the coverage and your role shrinks to prompt, accurate notification. That single structural fact explains most of the differences between the two regimes.
A fully insured plan is one where you buy a policy from an insurer and the insurer pays the claims. A self-funded plan is one where your business pays the claims itself, even if a carrier or administrator processes them. That difference generally decides whether a state continuation law can reach your plan at all.
Under federal COBRA the plan is responsible, which in practice means you or an administrator you hire. Under state continuation the policy is responsible, which means the insurer. The work you keep is telling the carrier who lost eligibility and when, and telling the employee that the option exists.
State law usually sets the deadline for that notice. Virginia, for one, requires the group policyholder to give written notice of the availability of continuation within fourteen days of learning that someone lost eligibility (Va. Code 38.2-3541).
| Dimension | Federal COBRA | State continuation |
|---|---|---|
| Who is regulated | The group health plan and its sponsor | The insurance carrier issuing the policy |
| Who administers it | You, or an administrator you appoint | Usually the carrier |
| Which plans it reaches | Insured and self-funded alike | Generally fully insured plans only |
| Duration | 18, 29, or 36 months depending on the event | Anything from a few months to 36, set state by state |
| Qualifying events | A single federal list | State defined, sometimes broader than the federal list |
| Premium ceiling | Generally 102 percent of the full cost | Set by state law, commonly around 102 percent |
| Your main duty | Notices, elections, premium tracking, records | Prompt notification on a state deadline |
The third row is the one that catches people. Because these laws work through insurance regulation, they generally cannot reach a self-funded plan.
Federal benefits law, the Employee Retirement Income Security Act (ERISA), preempts state laws that relate to employee benefit plans, and it stops states from treating a self-funded plan as though it were an insurer for the purpose of applying insurance rules to it (29 U.S.C. 1144).
Level-funded arrangements deserve a specific mention here, because they are marketed to small employers and they are self-funded underneath the packaging. If you are under 20 employees and your plan is self-funded or level-funded, there is a real chance no continuation law reaches you at all. Confirm the structure of your own plan before you assume a state rule protects your leavers.
What COBRA Administration Involves
Where federal COBRA does apply, administering it is a chain of deadlines rather than a single task. You have 30 days to notify the plan administrator that an employee lost coverage through termination or a reduction in hours.
The administrator then has 14 days to send that person the election notice. Where you are your own administrator, the two run together into 44 days (29 CFR 2590.606-4).
The qualified beneficiary, meaning a person who lost coverage through the event, then has 60 days to elect, and cannot be required to pay the first premium until 45 days after electing. Later payments carry a grace period of 30 days (Centers for Medicare and Medicaid Services). The arithmetic means coverage can sit elected, retroactive, and unpaid for months.
That is the process a growing employer inherits on the first January after a year in which it normally employed 20 or more, and it is the argument for appointing an administrator during the growth year rather than in the week of the first departure.
What You Owe When Neither Applies
When federal COBRA does not reach you and state continuation does not either, no law requires you to continue anyone’s coverage. What you owe instead is information, delivered early enough to be useful, and the cost of getting that part right is close to zero.
The single most valuable thing you can give a departing employee is the exact date their coverage ends, in writing. Not the termination date, the coverage end date, which is frequently the last day of the month and frequently misunderstood. Every clock that matters to that person starts from it.
Employers sometimes ask whether they can simply keep a departing person on the group plan for a month or two as a goodwill gesture. Ask the carrier before promising it. Eligibility rules in the policy usually define who may be covered, and covering somebody outside those rules can create a claim the plan will not pay.
If continuation gaps are a recurring problem for your leavers, that is a signal about plan design rather than about offboarding. A reimbursement arrangement moves the policy into the employee’s own name, which travels with them.
Dwight SchruteSales3 people
Darryl PhilbinWarehouse1 person
Kelly KapoorCustomer Service1 personThe Marketplace Special Enrollment Period
Losing job-based coverage opens a 60-day special enrollment period on the Health Insurance Marketplace. For an employee at a business outside both continuation regimes, that window is the main route back to coverage, so the dates around it matter more than anything else you can tell them.
The window opens before the loss as well as after it. HealthCare.gov says a person qualifies if they lost qualifying coverage in the past 60 days or expect to lose it in the next 60.
A Marketplace plan takes effect on the first day of the month after the job-based plan ends, never the same day (HealthCare.gov). Where coverage ends on the last day of a month, enrolling ahead of the loss is the version that avoids a gap. That is why telling people the end date early is worth more than any explanation you could add to it.
Do not promise anyone the Marketplace will be cheaper. According to HealthCare.gov, the additional savings available because of the COVID pandemic ended on December 31, 2025, so a household that qualified for help then may find less of it now. Point people at the plan comparison and let them price it.
Two operational details are worth passing on. Documentation of the loss is not a formality: HealthCare.gov warns that someone who does not supply acceptable documents will not qualify for the special enrollment period, so a letter naming the plan and the end date can be the difference between coverage and none.
The second detail is the deadline. The enrollment must be completed inside the window, which is a hard boundary rather than a guideline.
There is a second route people forget. Losing eligibility for group coverage triggers a special enrollment right into a spouse’s employer plan, where the federal minimum window is only 30 days, half the Marketplace window (29 CFR 2590.701-6). Anyone with a working spouse should be told to call that employer within days rather than weeks.
The Notices That Survive Regardless
Being outside federal COBRA removes the COBRA notices and nothing else. Every other disclosure attached to sponsoring a health plan continues to apply, and several of them carry deadlines that small employers miss precisely because they associate benefits paperwork with COBRA.
| Notice | When it is due | Who it reaches |
|---|---|---|
| Summary plan description | Generally within 90 days of a participant becoming covered | Every participant in an ERISA-covered plan |
| Summary of benefits and coverage | At application, enrollment, and on renewal | Every participant and beneficiary in a major medical plan |
| Medicare Part D creditable coverage notice | Annually, before October 15, plus other triggering points | Medicare eligible participants, dependents, and continuation enrollees |
| Creditable coverage disclosure to the federal government | Within 60 days of the start of each plan year, through the online form | Filed with the Centers for Medicare and Medicaid Services |
| Marketplace coverage options notice | At the time of hiring | New employees at businesses covered by the Fair Labor Standards Act |
| State continuation notice | State deadline, sometimes within 14 days of the loss of eligibility | The employee or the carrier, depending on the state |
The creditable coverage notice, which tells Medicare-eligible people whether your drug coverage is at least as good as Medicare’s, is the one I see missed most. It applies to any employer offering prescription drug coverage to Medicare-eligible individuals, it runs on a fixed annual date, and it has nothing to do with company size. The disclosure to the federal government sits alongside it and is a short online form rather than a project.
The Marketplace notice at hiring comes from the Affordable Care Act amendment to the Fair Labor Standards Act, and Department of Labor guidance states there is no fine or penalty for failing to provide it. That is a poor reason to skip it. It is a model document, it takes a minute to add to your onboarding pack, and it answers a question new hires ask anyway.
If you are unsure whether your plan is ERISA-covered and what documentation that pulls with it, the summary plan description is the right place to start. The federal government also publishes an employer-facing summary of the continuation rules (Department of Labor) that is worth reading once even if you conclude the rules do not apply to you.
Building the Count Into Your Year
Do the count once a year, in the same month, on the same basis, and keep the working. It takes under an hour with payroll data in front of you and it answers a question that would otherwise sit unresolved for twelve months.
January is the natural slot, because the year you are measuring has just closed and the answer applies immediately. Put it next to whatever else you already do in January and it stops being a task anybody has to remember separately.
Record four things: the basis you used, the hours standard you applied for full-time status, the list of entities you included, and the number of typical business days on each side of 20. The worksheet above already holds all four, so date it, note who completed it, and file it with the payroll data it was built from.
The worksheet file is not bureaucracy. It is the document that answers a former employee who claims a COBRA offer was owed, and it is far easier to write now than to reconstruct two years later.
Watch the trajectory as well as the number. If last year came in at seventeen and this year is on course to sit at 20 or more on more than half of its typical business days, you have several months of warning that federal COBRA attaches in January, and that warning is only useful if somebody is looking at it.
The simplest way to make sure somebody is looking is to fold the check into the same rhythm as the rest of your compliance calendar rather than treating it as a benefits question.
Where Small Employers Get This Wrong
Six patterns account for nearly every wrong answer I have seen, and the first three are counting errors.
Counting today instead of last year is first. The question is always about the preceding calendar year, so a headcount taken in the moment of panic answers a question nobody asked.
Counting people rather than fractions is second, and it is the most expensive one. A business with fourteen full-timers and a dozen part-timers can be over 20 without a single day when twenty people are in the building. If your part-time hours are meaningful, you cannot skip the conversion.
Counting one entity is third. Common ownership pulls the whole group into the count, and owners of multiple small entities are the group most likely to be wrong about their own status.
Assuming state law must be weaker is fourth. Several states run continuation for 36 months and define eligibility more broadly than the federal list, so a small employer can owe more through the carrier than a larger one owes directly.
Assuming a state rule protects a self-funded plan is fifth. Insurance regulation reaches insurers, and a self-funded or level-funded plan under the federal threshold may sit outside both regimes with nothing between the employee and an open market.
And silence is sixth. When neither law applies, saying nothing is the worst available option, because it costs the same as saying something and creates the impression that an offer was missed.
One footnote on the stakes. Where federal COBRA does apply and notices are missed, the excise tax under 26 U.S.C. 4980B runs at 100 dollars for each day of the noncompliance period for each qualified beneficiary.
The excise tax is limited to 200 dollars a day where the same qualifying event affects more than one qualified beneficiary. That arithmetic is why the count is worth doing properly rather than assuming: run it once a year, keep the working, and ask your carrier what your state requires.
Frequently Asked Questions
Does COBRA apply to small businesses?
Federal COBRA applies only when the employer maintaining a group health plan normally had 20 or more employees during the preceding calendar year. Normally has a precise meaning here: the employer counts as under 20 only if its count was below 20 on at least half of its typical business days that year. If you land under that line, your plan is excepted from federal COBRA altogether. The story does not end there, though. Many states make insurers offer continuation coverage to people losing coverage at smaller employers, for periods from a few months up to three years, and those state rules cover employers that federal COBRA never reaches. For a small employer, the real question is which of the two regimes applies to your plan and who runs it.
How do you count employees for the COBRA 20-employee threshold?
You count every full-time and part-time common law employee for the preceding calendar year, using either a daily basis or a pay period basis, and the basis you pick has to cover every employee for that whole year. A full-timer counts as one person. A part-timer counts as a fraction: the hours that person worked divided by the hours your business requires for full-time status, and that full-time figure can never be set above eight hours a day or 40 hours a week. Leave out self-employed individuals, independent contractors and their workers, and corporate directors. Then compare the total to 20 for each typical business day. If it was under 20 on at least half of those days, you are outside federal COBRA.
Does the COBRA count include part-time employees?
Yes, but as fractions rather than whole people, and this is where most small employers get the answer wrong. A part-timer working 20 hours where full-time is 40 counts as half an employee, so ten such part-timers add five to your count. A business that thinks of itself as having fourteen employees can be at 20 or more once part-time hours are converted, which can pull it inside federal COBRA without anyone noticing. Your own employment practices set the full-time standard, but it is capped at eight hours for any day or 40 hours for any week. Defining full-time as 50 hours a week to make the fractions smaller is not allowed.
Do employees at a parent company or sister company count?
Yes. For COBRA purposes your employer is wider than your own legal entity. It also covers any other member of a controlled group of corporations, a group of trades or businesses under common control, an affiliated service group, or a group described under the related aggregation rules, along with any successor to those entities. The regulation gives an example of a subsidiary with twelve employees in the United States whose parent group has more than nineteen worldwide: the subsidiary’s plan is not a small-employer plan, because the controlled group counts as the employer. If you have a holding company, several operating entities with common owners, or a recent asset purchase, run the count across the whole group, not entity by entity.
What happens the year we grow past 20 employees?
Nothing changes right away, and that is the useful part. The test looks back at the preceding calendar year, so growing past 20 in September does not make your plan subject to federal COBRA that month. Federal COBRA attaches on January 1 of the following year only if you were at 20 or more on more than half of that year’s typical business days, and it then applies to qualifying events from that date. If you are on course to meet that mark, use the rest of the year to appoint an administrator, prepare the general notice for every covered employee, and build the election and premium process. The reverse also holds. If you drop back under the threshold, the plan stops being subject to COBRA for new events, but you must keep offering continuation coverage to anyone whose qualifying event happened while the plan was subject.
What is state continuation coverage, and how is it different?
State continuation, often called mini-COBRA, is a state law that requires insurers to let people who lose group coverage keep it for a set period. It is not a scaled-down copy of the federal rule. Duration varies the most, from a few months in some states to a full 36 in others, and eligibility conditions vary too: some states require three months of continuous prior coverage before the loss, and some end the right once the employer drops the group policy. These laws regulate insurers rather than employers, so they generally reach fully insured plans only, and the carrier usually administers the coverage. Your own duty is often limited to notifying the carrier or the employee promptly, on a deadline set by state law.
What if we are under 20 and our state has no continuation law?
Then neither federal nor state law makes you continue anyone’s coverage. The same is true if your plan is self-funded, because state insurance laws generally cannot reach a self-funded plan. What you owe in that situation is information rather than coverage. Give the departing person the exact date their coverage ends, in writing, because that date starts every clock that matters to them. Losing job-based coverage opens a 60-day special enrollment period on the Health Insurance Marketplace, and the person can also enroll up to 60 days before the loss. A spouse’s employer plan has its own special enrollment right with a shorter deadline. None of that costs you money, but it does require you to be accurate about dates.
What notices do we still have to send if COBRA does not apply?
Staying outside federal COBRA excuses you from the COBRA notices only. A plan covered by the Employee Retirement Income Security Act (ERISA) still needs a summary plan description, and any plan offering major medical coverage still needs a summary of benefits and coverage. If the plan includes prescription drug coverage, you must tell Medicare-eligible participants every year, before October 15, whether that coverage is creditable, and report the same to the federal government. Businesses covered by the Fair Labor Standards Act must also give new hires the notice of Marketplace coverage options. Some states set their own continuation notice deadlines for the policyholder, sometimes as short as fourteen days after you learn of the loss of eligibility. Ask your carrier which of these fall on you.
Make HR the easy part of running your business
Onboarding, e-signatures, training and core HR in one place. Up and running in 5 minutes.
- 7-day free trial
- No credit card required
- Cancel anytime