COBRA: Process Overview

In order to remain compliant, employers must offer their terminated employees COBRA coverage after termination. Benefitbay currently uses a third-party administrator to manage COBRA on behalf of employers who have signed up for the service. 

With an ICHRA plan, electing COBRA does not make sense for the employee. In group insurance, COBRA allows terminated EEs to continue on group coverage by paying the monthly premium + a 2% administrative fee. However, with an ICHRA, employees can continue their coverage by going directly to the carrier to pay for their full monthly premium. By going direct, the employee does not have to pay the 2% fee. 

For additional context, if an employee tries to elect COBRA, there is high risk of coverage loss, extra expense to the employee, and significant administrative work and frustration for the COBRA SME, CSM, ER and EE. 

Best practice: CSMs will train ER groups to include relevant termination information in their offboarding steps for terminated employees. 

COBRA Process Overview

1. ER signs up for COBRA during the contract stage -- as of November 2026, until further notice, do not go farther in the process