COBRA Administration
COBRA Administration
What Michigan Employers Need to Know About COBRA Compliance
When employees lose employer-sponsored health coverage, federal law requires many employers to provide a continuation option. That option is known as COBRA (Consolidated Omnibus Budget Reconciliation Act)—and managing it properly is one of the most overlooked compliance responsibilities for employers.
COBRA allows employees and their dependents to temporarily continue their employer health insurance after certain “qualifying events,” such as termination of employment, reduction in work hours, divorce, or a dependent aging out of coverage. The coverage is typically identical to the employer’s group health plan and must be offered for a limited period of time.
For most employers, COBRA applies if the business had 20 or more employees in the previous calendar year.
When employees lose employer-sponsored health coverage, federal law requires many employers to provide a continuation option. That option is known as COBRA (Consolidated Omnibus Budget Reconciliation Act)—and managing it properly is one of the most overlooked compliance responsibilities for employers.
COBRA allows employees and their dependents to temporarily continue their employer health insurance after certain “qualifying events,” such as termination of employment, reduction in work hours, divorce, or a dependent aging out of coverage. The coverage is typically identical to the employer’s group health plan and must be offered for a limited period of time.
For most employers, COBRA applies if the business had 20 or more employees in the previous calendar year.
How COBRA Works
Employees who qualify for COBRA continuation coverage have the right to stay on the same group plan, but they must usually pay the full premium plus up to a 2% administrative fee.
Coverage typically lasts:
18 months for job loss or reduced hours
36 months for events like divorce or death of the covered employee
Employees also generally have 60 days to elect COBRA coverage once they receive their notice.
Important Michigan Considerations
Unlike many states, Michigan does not have a “mini-COBRA” law requiring continuation coverage for employers with fewer than 20 employees. This means smaller employers often face confusion about what continuation options must be offered when coverage ends.
The Compliance Challenge
Employees who qualify for COBRA continuation coverage have the right to stay on the same group plan, but they must usually pay the full premium plus up to a 2% administrative fee.
Timely COBRA election notices
Tracking qualifying events
Premium collection and payment tracking
Reporting and documentation
Failure to meet notice requirements can result in significant federal penalties and legal exposure.
How Stearns HR Helps
Stearns HR provides full COBRA administration services including:
Required employee notifications
Compliance tracking
Premium billing and reconciliation
Employer reporting
Our goal is simple: remove the administrative risk while keeping your business compliant with federal regulations.
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ABOUT STEARNS HR
RESOURCES
SERVICES
Talk to an HR Expert
(248) 720-5755
Open 8 AM - 4 PM EST
Stearns HR | About | Services | ICHRA Reframe
© 2025 Stearns HR, Sterling Heights, Michigan — Making small businesses mighty.