Payroll & Benefits
COBRA Administration
COBRA administration is the work of offering continuation coverage to people who lose group health coverage: sending the general and election notices, taking elections, billing and collecting premiums, telling carriers who is covered, and ending coverage on time. Most employers buy it as an outsourced service from a third-party administrator with its own software and portals.
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Research in progress
We are verifying COBRA administration products against vendors’ official documentation and pricing pages. A ranking by LeadChange Score appears here once at least 3 products pass our research checks. Until then, this page explains what the software does, what we evaluate and how to choose.
What we evaluate
Qualifying event intake
Receives terminations, reductions in hours and dependent changes from HRIS, payroll or a web form, with time stamps.
General notices
Sends the initial notice of COBRA rights to newly covered employees and spouses.
Election notices
Produces and mails election notices after qualifying events and tracks each election window.
Participant elections and portal
Lets qualified beneficiaries elect coverage, view rates and pay online, by phone or by mail.
Premium billing and collection
Bills continuants, applies grace periods and partial-payment rules, and tracks paid-through dates.
Premium remittance
Sends collected premiums to the employer or carriers with reconciliation reports.
Carrier eligibility updates
Notifies carriers of elections, reinstatements and terminations by file or notice.
Coverage period tracking
Calculates maximum coverage end dates, extensions and early terminations, and sends the related notices.
State continuation administration
Administers state mini-COBRA coverage alongside federal COBRA.
Notice and payment audit trail
Keeps dated records of every notice mailed, election received and payment applied.
Who needs COBRA administration?
You need COBRA administration if you sponsor a group health plan and federal COBRA applies to you. The Department of Labor's employer guide says COBRA generally applies to private-sector group health plans maintained by employers with at least 20 employees on more than 50 percent of their typical business days in the previous calendar year, counting part-time employees as a fraction of a full-time employee. For state and local government plans, the Department of Health and Human Services administers COBRA.
The work is deadline-driven. The plan must give a general notice of COBRA rights within the first 90 days of coverage, the employer must notify the plan within 30 days of qualifying events such as termination or reduced hours, and the plan must send an election notice within 14 days after that. Qualified beneficiaries then get at least 60 days to elect, at least 45 days after electing to make the first payment, and a grace period of at least 30 days for later payments. Coverage generally lasts 18 or 36 months depending on the event, and premiums cannot exceed 102 percent of the plan's cost.
Smaller employers are not off the hook everywhere. The Department of Labor notes that many states have similar laws, often called mini-COBRA, for health plans of employers with fewer than 20 employees. If you have few departures a year, your benefits administration platform or carrier may already handle notices; outsource when terminations are frequent, payments arrive by mail, or nobody owns the deadlines.
How to choose COBRA administration
COBRA administration is a chain of deadlines that starts with your data. The provider can only send a timely election notice if it learns about the qualifying event in time, so choose on how events reach the provider, how every notice is proven, and how premiums and carrier updates are reconciled.
It also differs from benefits administration software. Benefits platforms run enrollment, eligibility and payroll deductions for active employees and often list COBRA as a feature; a COBRA administrator takes over the former employees and dependents who elect continuation, including mailing notices, collecting their premiums and keeping carriers in sync. Ask any benefits platform whether its COBRA support is its own service or a hand-off to a third party.
Qualifying event intake
The employer must notify the plan within 30 days of events such as termination or reduced hours, and late data makes every later deadline harder.
Notice coverage and proof of mailing
The general notice, election notice, notice of unavailability and notice of early termination each have their own trigger and timing.
Election and enrollment tracking
Qualified beneficiaries get at least 60 days to elect, and each family member can have separate rights.
Premium billing and collection
Plans must allow at least 45 days for the first payment and a grace period of at least 30 days for later ones, and a short payment that is not significantly less than due can be cured.
Premium remittance and reconciliation
Collected premiums have to reach the employer or carrier and match what was billed.
Carrier eligibility updates
Coverage must be reinstated when someone elects and pays, and ended when coverage terminates early.
Requirements by company size
Small businesses
- Federal COBRA and state continuation handled in one service
- Simple event reporting through a web form or payroll sync
- Online elections and payments for participants
Watch out for
- Monthly minimums that exceed the value of a few departures a year
- State continuation left to you or the carrier without saying so
- Separate fees for each notice type
Mid-sized companies
- Automatic qualifying event feeds from HRIS or payroll
- Electronic eligibility updates to each carrier
- Paid-through and remittance reports for finance
Watch out for
- Carrier updates sent by fax or email with no audit trail
- Events that wait for a manual upload
- Remittance schedules that leave premiums held for weeks
Enterprises
- Multi-entity and multi-plan rate tables
- Capacity for large layoffs without missed deadlines
- Complete notice and payment history for audits and disputes
Watch out for
- Rush fees for high-volume events
- Custom rate structures that require manual work every plan year
- Unclear contract terms on who bears the cost of a missed notice
Red flags
- No dated mail log or proof of delivery for each notice
- Qualifying events reported by email with no time stamp
- The provider cannot explain how it handles partial or late payments
- Carrier reinstatements and terminations are left to you
- State continuation is excluded without being disclosed
- Marketing implies the service guarantees compliance or removes all employer responsibility
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Frequently asked questions
What is COBRA administration?
COBRA administration is managing continuation coverage for people who lose group health coverage after a qualifying event. It covers sending required notices, taking elections, billing and collecting premiums, updating carriers, and ending coverage when the maximum period runs out or payments stop. Employers can do it themselves, but the Department of Labor notes that many hire third-party benefit administrators.
What do COBRA administration services include?
A full service usually handles general notices to new plan members, election notices after qualifying events, online or mail elections, premium billing and collection, remittance to the employer or carrier, carrier eligibility updates, and notices when coverage is denied or ends early. Many also administer state continuation coverage and send open enrollment materials to continuants.
Which employers are required to offer COBRA?
The Department of Labor says COBRA generally applies to private-sector group health plans of employers with at least 20 employees on more than 50 percent of their typical business days in the previous calendar year. Part-time employees count as a fraction of a full-time employee. Many states have mini-COBRA laws for plans of employers with fewer than 20 employees.
What is the COBRA administration fee?
The phrase is used two ways. For participants, the Department of Labor says the COBRA premium cannot exceed 102 percent of the plan's total cost, or up to 150 percent during a disability extension. For employers, it is what a COBRA administrator charges, typically per enrolled employee per month, per participant, per notice or as a bundle. Ask for every fee in writing.
What are the COBRA notice deadlines?
According to the Department of Labor's employer guide, the general notice goes out within the first 90 days of coverage, the employer notifies the plan within 30 days of qualifying events such as termination or reduced hours, and the plan sends an election notice within 14 days of being notified. A notice of unavailability also has a 14-day deadline, and early termination notices must be sent promptly.
How long does COBRA coverage last?
The Department of Labor lists 18 months for termination or reduced hours, which can extend to 29 months with a disability determination or to 36 months with a second qualifying event. Events such as divorce, death of the employee or loss of dependent status allow up to 36 months. Coverage can end early, for example if premiums are not paid on time.
Do I need a COBRA administrator or can my benefits software handle it?
Benefits administration platforms often list COBRA support, but that can mean anything from a termination report to a full outsourced service. If your platform does not mail notices, collect premiums and update carriers for continuants, you need a COBRA administrator. Bundling COBRA with spending account administration from one provider can simplify billing and data feeds.
How we research
Products are ranked by the LeadChange Score, computed only from verified facts: capability coverage (30%), pricing transparency and value (20%), integrations and API (15%), security and compliance (15%), fit and support (10%) and data confidence (10%), times a category fit that lowers products built for another job. Payment never changes a score or a position.
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