COBRA Administration for Texas Employers: Notices and Continuation

Texas employers should first determine whether federal COBRA, Texas state continuation or both apply to their group health coverage. Then assign responsibility for event reporting, notices, elections, premium collection and carrier reconciliation. Federal COBRA generally starts at 20 employees under a prior-year test; a small employer may still have state continuation duties.

What is COBRA?

COBRA is a federal law that lets eligible employees and family members temporarily continue group health coverage after a qualifying event would otherwise end it. COBRA continues the employer’s plan rather than creating a separate individual insurance policy.

The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) generally applies to private-sector group health plans maintained by employers with at least 20 employees on more than half their typical business days in the previous calendar year. Count full-time employees and fractional part-time employees; do not count only people enrolled in the health plan. Insured and self-funded plans can be subject to federal COBRA. Review related-employer and special-plan questions with counsel rather than relying on a current payroll snapshot.

Who qualifies for COBRA coverage?

Federal COBRA qualified beneficiaries generally include the employee, spouse and dependent children covered the day before a qualifying event, subject to the event and plan requirements. Each qualified beneficiary has an independent election right; a covered domestic partner is not automatically a federal qualified beneficiary.

An event must cause a qualified beneficiary to lose coverage. Job termination other than gross misconduct and reduced hours are common events. Death, divorce, legal separation, Medicare entitlement and loss of dependent status can create rights for spouses or children in the appropriate circumstances. Being a smaller employer does not establish that no continuation obligation exists. Review the actual insurance contract and funding arrangement.

When is an employee not eligible for COBRA coverage?

An employee generally lacks a federal COBRA election right if the plan is not subject to COBRA, the employee was not covered before the qualifying event, or the event did not cause loss of coverage. Termination for gross misconduct is an exception that requires careful legal review, not an automatic label for every involuntary discharge.

COBRA does not continue life or disability insurance, and an individually purchased health policy is not employer group coverage. If the employer stops maintaining all group health plans, COBRA generally cannot preserve a plan that no longer exists. Check Texas state continuation separately before concluding that an employee has no continuation option.

Federal COBRA versus Texas state continuation

The Texas Department of Insurance guide confirms the nine-month state continuation option when COBRA is unavailable, the possible six-month state extension after COBRA, and the exclusion for self-funded plans. State continuation generally requires three months of prior continuous coverage and has additional eligibility conditions. Confirm election procedures with the insurer; do not copy federal deadlines into a state continuation notice. A termination reason can affect state eligibility differently from federal COBRA.

How long does COBRA coverage last in Texas?

Federal COBRA in Texas generally lasts up to 18 months after termination or reduced hours; qualifying disability extensions can reach 29 months, and certain family events or second qualifying events can allow up to 36 months. Texas state continuation can provide nine months when federal COBRA is unavailable or a six-month extension after COBRA for eligible insured coverage.

Record the event, beneficiary and applicable maximum period rather than assigning every person the same end date. A disability extension requires the applicable Social Security determination and timely notice; second-event extensions also have conditions and notice requirements. Early termination can occur for permitted reasons, so the maximum duration is not a promise of unconditional coverage.

What are employer responsibilities under COBRA?

Employer COBRA responsibilities include identifying applicable coverage, reporting employer-known qualifying events, coordinating required notices and ensuring accurate enrollment and premium administration. The employer should name an owner and backup even when a vendor handles notices or collections.

The Department of Labor employer COBRA guide describes the federal notice duties below. These are general single-employer rules; multiemployer plans can have special procedures. Document both the event date and the loss-of-coverage date because the plan’s coverage terms can affect when a notice clock begins.

1. Give the employee and covered spouse the general COBRA notice within the first 90 days of coverage. Record how delivery was completed.
2. Notify the plan administrator within 30 days of an employer-reportable event, such as termination, reduced hours or death. Where the plan extends coverage after the event, confirm the applicable clock with the administrator.
3. The plan administrator generally sends the election notice within 14 days after receiving the qualifying-event notice. If the employer is also the administrator, the election notice is generally due within 44 days of the event or applicable coverage loss, not 44 additional days after the 30-day period.
4. Maintain beneficiary reporting procedures for divorce, legal separation and loss of dependent status. The allowed notice period cannot be shorter than 60 days measured under the federal rules.
5. Allow each qualified beneficiary at least 60 days to elect from the later of the election notice or coverage loss. Track the separate initial-premium deadline of 45 days after election.
6. If continuation is unavailable, issue the required unavailability notice within 14 days after the request. If coverage ends early, provide an early-termination notice as soon as practicable after the decision.

Use a controlled event-to-carrier workflow

Assign a primary owner and backup for termination and status-change feeds. The feed should identify the employee, covered family members, event type, last active coverage date and current addresses. Restrict access to necessary personnel. An exit interview is not proof that a required notice was delivered, and removing a person from payroll is not the same as reporting the event to the COBRA administrator.

Keep notice copies, address records, dispatch evidence, election responses, premium transactions and carrier confirmations together. Review returned mail promptly. When a vendor performs an activity, define the service deadline and escalation contact in the agreement. Outsourcing administration does not make missing or incorrect employer data harmless. Our questions for a third-party administrator can help you clarify responsibilities before selecting a vendor.

Coordinate renewal, payments and early termination

Qualified beneficiaries on COBRA receive the same coverage choices available to similarly situated active participants during open enrollment. Include them in renewal communications, applicable plan summaries and rate changes. Reconcile elections with the carrier rather than assuming the active-employee file includes former employees. Keep continuation populations visible when replacing a carrier or changing plan options.

Confirm who collects premiums, who tracks grace periods and who authorizes reinstatement or early termination. Federal COBRA generally requires a minimum 30-day grace period for later premiums. Do not cancel coverage simply because an internal accounting report shows a missed payment without applying the plan’s required payment procedures. Consult counsel on disputed eligibility or gross-misconduct cases rather than inventing an exclusion.

A hypothetical administration scenario

Suppose a Houston employer with 24 employees ends an employee’s active coverage at month-end after a midmonth termination. HR sends the event to payroll but not the continuation vendor. The first control failure is the missing event feed, not a refusal by the employee to elect. HR should confirm the correct legal timetable, coordinate corrective action with the administrator and counsel, and reconcile carrier records. The company should also add a backup check linking termination reports to completed notices.

Do you need help with COBRA administration?

COBRA administration support is useful when HR cannot consistently track events, document notices, reconcile payments or coordinate former employees with the carrier. Begin with an ownership review and unresolved-case list; legal disputes still require qualified counsel.

The employer’s job is to administer a compliant process, not decide which coverage is best for a former employee. Direct employees to their COBRA election and coverage rights and the administrator’s instructions. Do not tell every family it automatically has 36 months or that state continuation is available on every plan. Primary Care Insurance Solutions (PCI Solutions) can help employers organize HR compliance and benefits administration support while qualified counsel addresses legal interpretations and disputed cases.