COBRA Insurance & Administration Services
If you offer group health, dental, or vision insurance to 20 or more employees, federal law requires you to provide COBRA coverage when employees lose their health benefits.
Let Paychex handle the complexity of COBRA notifications, payment processing, compliance tracking, and regulatory updates.
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The Cost of Non-Compliance
COBRA is federally regulated with strict deadlines and documentation requirements. COBRA allows former employees and their families to continue their existing medical, dental, and vision coverage for a limited time after qualifying events like termination or reduced hours. Don’t fall victim to the common compliance risks:
- Missed notification deadlines, incomplete records, and processing errors
- Non-compliance penalties of $100 per beneficiary ($200 per family) for each day of non-compliance, plus $110 per day per qualified beneficiary for missing required notices*
- Department of Labor audits, legal fees, and coverage of medical claims
What Paychex COBRA Administration Includes
Simple Program Setup
We handle the initial setup of your COBRA and state continuation programs quickly and efficiently, so you're compliant from day one.
Automatic Notifications
COBRA notices are sent automatically to qualified beneficiaries when you process terminations through Paychex Payroll.
Payment and Election Management
We manage participant payments, track elections, and handle remittances so you don't have to chase down premiums or process paperwork.
Expert Compliance Support
Your dedicated COBRA specialist monitors regulatory changes, helps you meet federal and state requirements, and provides guidance to keep your business protected.
Coverage Across Our HR Packages
COBRA administration is included with Paychex HR Pro, HR Partner, and PEO packages. It's also available as a standalone service for businesses that offer group health, dental, or vision insurance plans.
Three Steps To Get Started
Choose Your Solution
Our team helps you select the right Paychex package that integrates seamlessly with your existing benefits administration.
Launch With Confidence
We handle the complete setup and provide ongoing support, so you can manage COBRA requirements efficiently.
Complete Your Business Strategy
Set your business up for success. Our solutions are designed to work well together and can all be managed from one convenient platform.
Resources for You
COBRA Administration FAQs
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How Does COBRA Insurance Work?
How Does COBRA Insurance Work?
COBRA allows employees and their families to continue their employer-sponsored group health insurance coverage after losing eligibility due to job loss, reduced hours, or other qualifying life events. Coverage continues the same medical, dental, and vision benefits they had while employed, with no changes to plan features or networks.
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What Does a COBRA Administrator Do?
What Does a COBRA Administrator Do?
A COBRA administrator handles all program requirements including sending legally required notices to eligible participants, collecting premium payments, managing enrollment forms, tracking coverage periods, and notifying individuals when coverage ends. Administrators assist with timely compliance with federal COBRA regulations and state continuation requirements, reducing the risk of costly penalties for employers.
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Who Is the Plan Administrator for COBRA?
Who Is the Plan Administrator for COBRA?
The employer is the legal plan administrator responsible for COBRA compliance, even when using a third-party COBRA administrator to handle day-to-day tasks. Employers can manage COBRA administration in-house or outsource to specialized providers like Paychex, but the employer remains legally liable for compliance with federal and state regulations.
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Who Qualifies for COBRA Coverage?
Who Qualifies for COBRA Coverage?
Employees who participate in an employer-sponsored group health plan qualify for COBRA after a qualifying event like termination, resignation, or reduced work hours. Their covered dependents (spouses and children) also qualify. The employer must have 20 or more employees on more than 50% of business days in the previous calendar year for federal COBRA to apply, though some states require continuation coverage for smaller employers.
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Why Is COBRA Insurance So Expensive?
Why Is COBRA Insurance So Expensive?
COBRA costs significantly more than active employee coverage because participants pay the full insurance premium (both the employer and employee portions). While employed, employers cover a large share of the health insurance premium, but COBRA participants are responsible for 100% of the cost to maintain the same coverage.
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How Much Does COBRA Insurance Cost?
How Much Does COBRA Insurance Cost?
COBRA insurance costs vary based on your previous employer's group health plan. The exact cost equals the full group health insurance premium your employer pays plus up to 2% for administrative fees, which is why it's significantly more expensive than active employee coverage.
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How Long Does COBRA Coverage Last?
How Long Does COBRA Coverage Last?
COBRA coverage duration depends on the qualifying event: 18 months for job termination or reduced hours, 29 months if the covered individual becomes disabled during the first 60 days of COBRA, and 36 months for qualifying events like divorce, legal separation, death of the covered employee, or a dependent child losing eligibility. If a second qualifying event occurs during the initial 18-month period, beneficiaries may extend coverage to 36 months in total.
