COBRA qualifying event

A COBRA qualifying event is a specific life or job-related change that causes an employee (or their dependents) to lose group health insurance coverage.

Homebase Team

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What is a COBRA qualifying event?

A COBRA qualifying event is a specific life or job-related change that causes an employee (or their dependents) to lose group health insurance coverage. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), these events entitle eligible individuals to continue their health insurance coverage—at their own cost—for a limited time.

For small business employers with 20 or more employees, understanding and correctly responding to COBRA qualifying events is essential to staying compliant with federal law. If you offer group health insurance and one of these events occurs, you’re legally required to provide COBRA continuation coverage notices. Tools like Homebase can help streamline your HR processes so nothing falls through the cracks.

Common COBRA qualifying events

COBRA applies when a qualifying event leads to a loss of health insurance coverage. These events are typically grouped by whether they affect the employee or the employee’s spouse/dependents.

For employees:

Voluntary or involuntary job loss (except for gross misconduct)
Reduction in hours that causes a loss of eligibility for benefits (e.g., moving from full-time to part-time)

For spouses or dependents:

Employee’s job loss or reduction in hours
Employee’s death
Divorce or legal separation from the covered employee
Employee becoming eligible for Medicare
Dependent child aging out of the plan (usually at age 26)

When any of these events occurs, it triggers the employer’s obligation to offer COBRA continuation coverage.

What happens after a qualifying event?

When a qualifying event takes place, the process typically looks like this:

The plan administrator is notified of the event.
- Employers must notify the plan within 30 days of events like termination or reduced hours.
- Employees or dependents must notify the plan within 60 days for events like divorce or a child aging out.
The employer sends a COBRA election notice to the affected individuals.
- This must happen within 14 days of receiving notice of the qualifying event.
- The notice must explain the individual’s right to continue coverage, cost, and deadlines.
The individual has 60 days to elect COBRA coverage
- If they choose coverage, it’s retroactive to the date of the qualifying event.
- They pay the full cost of the premium (plus a 2% administrative fee).

Duration of COBRA coverage

The length of COBRA continuation depends on the nature of the qualifying event:

Up to 18 months for job loss or reduction in hours
Up to 36 months for divorce, death, Medicare eligibility, or a child aging out
In some cases, coverage can be extended if a second qualifying event occurs

Employers must track these timelines to ensure coverage ends appropriately.

Who is responsible for COBRA compliance?

If you offer group health insurance and have 20 or more employees, you’re legally responsible for COBRA compliance—even if you outsource HR or benefits management.

Your duties include:

Identifying qualifying events
Sending timely COBRA election notices
Tracking coverage periods
Managing plan enrollment and billing (or coordinating with a third-party administrator)
Staying compliant with federal notice and documentation requirements

If you don’t offer health insurance, or if you have fewer than 20 employees, COBRA may not apply—but some states have their own “mini-COBRA” laws with similar rules.

COBRA penalties for employers

Failing to comply with COBRA obligations can result in significant penalties:

$110 per day per violation under the Department of Labor (DOL)
IRS excise tax penalties of up to $100 per day per individual
Potential lawsuits from employees or dependents who weren’t properly notified

Even simple administrative errors—like missing a deadline or forgetting a notice—can be costly.

Best practices for managing COBRA qualifying events

Keep detailed records of employee status changes, terminations, and dependent eligibility
Work with a benefits administrator or broker to handle COBRA notices and billing
Train your HR or payroll team on how to spot and report qualifying events
Use payroll and HR software that alerts you to potential COBRA triggers
Stay informed of both federal and state-specific COBRA rules

How Homebase supports HR compliance

While Homebase doesn’t directly manage COBRA benefits, it helps employers stay organized and compliant by:

Tracking employee hours and status changes (such as full-time to part-time)
Storing personnel and employment records securely
Managing onboarding and offboarding processes with clear workflows
Helping small business owners stay ahead of labor and HR compliance tasks

Explore Homebase HR & Compliance to streamline your people operations, reduce compliance risk, and manage HR changes confidently—even when the unexpected happens.

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