COBRA may not be glamorous, but the penalties are very real. The good news is that most costly COBRA problems come from a handful of small mistakes. Tighten these up, and you dramatically lower your risk!

1. Treating “Last Day Worked” and “Loss of Coverage” as the Same Thing

COBRA starts on the date coverage is lost—not necessarily the employee’s last day worked. For example, if employment ends on the 10th but coverage continues through the end of the month, your COBRA timeline begins when coverage ends. Confusing those two dates can delay required notices and increase your risk of penalties.

The Fix: Always verify your plan’s coverage termination date. Document both the termination date AND the coverage end date in your records.

2. Letting Terminations Sit in Someone’s Inbox

Delay is the silent COBRA killer. A manager forgets to send the termination info, HR waits for payroll, payroll is “closing the month”, and suddenly your notice deadlines are uncomfortably close!

The Fix: Set a clear internal rule for example: “Terminations must be sent to HR within 24 hours,” and “COBRA data must be sent to our administrator within 3 business days.” Then automate reminders where you can.

3. Assuming Your Payroll System “Handles COBRA”

Many payroll/HRIS platforms can generate data, but they don’t automatically guarantee compliance. If no one is actively checking that qualifying events, addresses, and coverage tiers are accurate, bad data turns into bad notices.

The Fix: Implement a monthly reconciliation process. Have someone (not the system) verify that terminations, addresses, and coverage information match reality. Bad data = bad notices = penalties.

4. Ignoring Returned Mail and Bad Addresses

If a COBRA notice gets returned and no follow up occurs, it may look like the person didn’t have a fair chance to elect coverage. Courts care about whether your process is reasonable and good‑faith—not perfect, but not “we shrugged and moved on.”

The Fix: Create a “returned mail” protocol: check for updated addresses in HRIS or via the manager, re‑send if you can, and document the attempt. As your COBRA Administrator, ITEDIUM handles this process for you.

5. Forgetting About Dependents and Divorce

Employees are not the only people with COBRA rights. Spouses and dependents can have separate rights, especially in cases of divorce or a child aging out. If your team only thinks “COBRA” when an employee terminates, you’re missing events that can trigger penalties!

The Fix: Train your HR team on dependent-related qualifying events. Create a checklist: termination, divorce, dependent aging out, death of spouse. Each triggers separate COBRA obligations.

6. Treating COBRA as “Set It and Forget It”

Outsourcing COBRA is smart, but it’s not a full “get‑out‑of‑jail‑free” card. If your administrator doesn’t get timely, accurate data from you, you’re still on the hook. COBRA is a team sport: you provide clean, prompt info; your administrator handles the technical mechanics.

The Fix: Establish Regular Check-Ins with Your COBRA Administrator

Schedule quarterly or semi-annual reviews with your COBRA administrator to verify alignment on critical data points. During these check-ins, confirm:

• Active Participant Lists: Ensure the administrator has current, accurate rosters of all COBRA-eligible individuals and their coverage status.
• Payment Status & History: Review which participants are current on premiums, identify any payment gaps or issues, and confirm collection processes are working as intended.
• Rate Changes & Plan Updates: Verify that any rate adjustments, plan modifications, or qualifying events have been properly reflected in the system.
• Eligibility & Terminations: Confirm that terminations are processed timely and that no ineligible participants remain on the rolls.
• Notice Compliance: Spot-check that required notices (initial COBRA notices, continuation notices, etc.) were issued correctly and on time.

This collaborative approach keeps your group and administrator on the same page. You provide clean, prompt information; your administrator handles the technical mechanics. Regular touchpoints catch issues early—before they become penalties—and demonstrate your group's commitment to COBRA compliance. It's not about micromanaging; it's about shared accountability for getting it right.

COBRA mistakes can be costly, but they're completely avoidable. ITEDIUM eliminates the guesswork by automating the mechanics your group struggles with most: notice timing, payment reconciliation, eligibility tracking, and rate management. Your group stays compliant; your team stays sane.