If you run a business in Washington State, COBRA compliance is not optional. Missing a single notice deadline can cost your company $100 to $200 per day, per affected employee, and expose you to lawsuits from former workers who lost coverage they were entitled to keep.
Talk to a WHIA benefits advisor about your COBRA obligations. Get started here.
This guide breaks down exactly what Washington employers need to know about COBRA in 2026: which rules apply to your business, what notices you must send, when deadlines hit, and how Washington’s own continuation coverage law fills the gaps that federal COBRA leaves open.
What Is COBRA and Which Washington Employers Does It Apply To?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. Signed into law in 1985, it requires certain employers to offer former employees and their dependents the option to continue their group health insurance after a qualifying event, such as job loss, reduced hours, or divorce.
Federal COBRA applies to private-sector employers with 20 or more employees on more than 50% of typical business days during the prior calendar year. State and local government employers are also covered under parallel provisions of the Public Health Service Act. The employee count includes full-time and part-time workers, though part-time employees are counted as a fraction based on hours worked.
If your Washington business has fewer than 20 employees, federal COBRA does not apply to you directly. However, Washington State has its own continuation coverage law that fills this gap. More on that below.
According to the U.S. Department of Labor, COBRA applies to all group health plans maintained by covered employers, including medical, dental, vision, prescription drug plans, and health flexible spending accounts (FSAs). It does not apply to life insurance or disability plans.
Qualifying Events That Trigger COBRA Coverage
COBRA obligations kick in when a qualifying event causes a covered employee (or dependent) to lose group health coverage. The type of qualifying event determines how long coverage must last and who is responsible for notifying the plan administrator.
Employer-Reported Qualifying Events
These events must be reported by the employer to the plan administrator within 30 days:
- Voluntary or involuntary termination (for any reason other than gross misconduct): 18 months of COBRA coverage
- Reduction in work hours that causes loss of coverage: 18 months of COBRA coverage
- Employer’s bankruptcy (for retiree coverage): up to the lifetime of the retiree
Employee/Dependent-Reported Qualifying Events
These events must be reported by the employee or dependent to the plan administrator within 60 days:
- Divorce or legal separation from the covered employee: 36 months of COBRA coverage for the spouse and dependents
- Loss of dependent child status under the plan: 36 months of coverage
- Death of the covered employee: 36 months of coverage for the spouse and dependents
- Covered employee becoming entitled to Medicare: 36 months of coverage for the spouse and dependents
Note that termination includes voluntary resignation. If an employee quits, they are still eligible for COBRA continuation coverage under the same rules as an involuntary termination.
COBRA Notification Timelines: What Employers Must Send and When
COBRA’s notice requirements are strict, and missing them is one of the most common compliance failures. Here is the timeline every Washington employer needs to follow.
1. General Notice (At Enrollment)
When a new employee enrolls in your group health plan, you must provide a general COBRA rights notice to both the employee and their spouse. This notice explains their COBRA rights and obligations. Most employers include it in their benefits enrollment packet.
2. Employer Notification to Plan Administrator (Within 30 Days)
When a qualifying event occurs that the employer would know about (termination, hour reduction, death, Medicare entitlement, or employer bankruptcy), the employer must notify the plan administrator within 30 days of the event.
3. COBRA Election Notice (Within 14 Days)
After the plan administrator receives notice of a qualifying event, they must send a COBRA election notice to each qualified beneficiary within 14 days. This notice explains the right to continue coverage, the cost, and the deadlines.
4. Employee Election Period (60 Days)
Qualified beneficiaries have 60 days from the later of (a) the date they receive the election notice or (b) the date coverage would otherwise end to elect COBRA continuation coverage. Coverage is retroactive to the date it would have been lost.
5. First Premium Payment (45 Days After Election)
After electing COBRA, the beneficiary has 45 days to make their first premium payment. Subsequent payments are due within 30 days of each due date. The employer can charge up to 102% of the full premium cost, which includes the employer’s share plus a 2% administrative fee.
Need help setting up your COBRA notice process? Contact WHIA for a benefits compliance review.
Washington State Continuation Coverage vs. Federal COBRA
Washington State does not have a traditional “mini-COBRA” statute in the same way many other states do. However, Washington law does provide continuation coverage protections that fill important gaps, especially for smaller employers.
Washington’s Insurance Code: RCW 48.21.250 and RCW 48.44.240
Under Washington state law, group health insurance policies must include a continuation coverage option for employees who lose coverage due to certain qualifying events. This applies to insured group health plans regardless of employer size, which means even businesses with fewer than 20 employees must offer continuation coverage through their insurance carrier.
Key differences between Washington state continuation coverage and federal COBRA:
| Feature | Federal COBRA | Washington State Continuation |
|---|---|---|
| Employer size threshold | 20 or more employees | No minimum (applies to insured plans) |
| Coverage duration | 18 to 36 months (varies by event) | Typically 18 months for termination/hour reduction |
| Premium cost | Up to 102% of the full premium | Full group rate (no administrative surcharge required) |
| Self-funded plans | Covered | Not covered (state law applies to insured plans only) |
| Notification rules | Detailed employer/plan administrator obligations | Handled primarily through the insurance carrier |
| Enforcement | U.S. Department of Labor, IRS, and federal courts | Washington Office of the Insurance Commissioner |
For employers with 20 or more employees who offer insured group health plans, both federal COBRA and Washington state continuation requirements apply simultaneously. In most cases, federal COBRA is the controlling law because its protections are more extensive. However, if state law offers a more favorable provision on a specific point, the employee is entitled to the better benefit.
Self-Funded Plans: An Important Distinction
If your company operates a self-funded health plan, Washington state continuation coverage rules do not apply to you. Self-funded plans are regulated under ERISA at the federal level. Your COBRA obligations are governed entirely by federal law. This is an area where many employers with 50 to 300 employees get confused, since self-funded and level-funded arrangements are increasingly popular in this size range. A benefits advisor can help you determine which set of rules applies to your specific plan structure.
Penalties for COBRA Non-Compliance in 2026
The penalties for failing to meet COBRA requirements can be severe. Washington employers need to understand three categories of risk:
Federal Penalties
- IRS excise tax: $100 per day per qualified beneficiary for each day of non-compliance, up to $200 per day for family coverage. For unintentional violations, the maximum penalty is the lesser of 10% of the cost of the group health plan during the preceding year or $500,000.
- Department of Labor penalties: Up to $110 per day for failure to provide required COBRA notices.
- Lawsuits: Qualified beneficiaries can sue in federal court for the cost of COBRA coverage, statutory penalties of up to $110 per day, attorney’s fees, and other damages.
State-Level Enforcement
The Washington Office of the Insurance Commissioner oversees compliance with state continuation coverage rules. Carriers that fail to offer required continuation coverage face regulatory action. Employers working with non-compliant carriers could face indirect consequences, including coverage disputes and employee complaints.
Practical Risks
Beyond the financial penalties, COBRA violations create real business problems. An employee who was not properly notified about COBRA rights may file a complaint, leading to a DOL investigation that consumes HR time and legal fees. In worst-case scenarios, courts have ordered employers to pay the full cost of medical claims that would have been covered had COBRA been properly offered.
How Long Does COBRA Coverage Last?
The duration of COBRA coverage depends on the qualifying event:
- 18 months: Termination of employment (voluntary or involuntary) or reduction in hours
- 29 months: If the qualified beneficiary is determined to be disabled by Social Security within the first 60 days of COBRA coverage, they may extend coverage to 29 months (the employer can charge up to 150% of the premium during the 11-month extension)
- 36 months: Death of the covered employee, divorce or legal separation, loss of dependent status, or the covered employee becoming entitled to Medicare
A second qualifying event during the initial 18-month period can extend coverage to 36 months from the date of the original qualifying event. For example, if an employee is terminated and then dies during the COBRA period, the employee’s dependents can continue coverage for up to 36 months total.
What Does COBRA Cost Employers and Employees?
COBRA does not require employers to subsidize the coverage. The former employee pays the full premium, including the portion the employer previously contributed, plus an optional 2% administrative surcharge.
For context, the average employer-sponsored health insurance premium in 2025 was approximately $8,951 for single coverage and $25,572 for family coverage, according to the Kaiser Family Foundation. At 102% of those amounts, a former employee would pay roughly $761 per month for single COBRA coverage or $2,174 per month for family coverage.
While the employer is not paying for the coverage, there are administrative costs to manage:
- Processing COBRA elections and premium payments
- Tracking eligibility periods and expiration dates
- Sending required notices within deadlines
- Coordinating with your insurance carrier on COBRA enrollees
Many Washington employers work with a benefits broker or third-party administrator (TPA) to handle COBRA administration, reducing the compliance burden on internal HR staff.
How Washington Employers Can Stay COBRA-Compliant in 2026
Staying compliant with COBRA does not have to be complicated if you build the right processes from the start. Here are the steps Washington employers should take:
- Determine your obligation level. Count your employees on a typical business day. If you have 20 or more, federal COBRA applies. If you have fewer than 20 with an insured group health plan, Washington state continuation coverage rules still apply.
- Build a qualifying event checklist. Train your HR team to recognize qualifying events and understand who is responsible for reporting each type. Terminations and hour reductions are employer-reported. Divorces and dependent status changes are employee-reported.
- Standardize your notice process. Use template letters that meet DOL requirements. Send notices via certified mail or with delivery confirmation so you can prove compliance if challenged.
- Track deadlines in a system, not a spreadsheet. COBRA administration involves multiple overlapping timelines: 30-day employer notice, 14-day election notice, 60-day election window, 45-day first payment, and 30-day subsequent payments. A dedicated system or TPA prevents missed deadlines.
- Review your plan documents annually. COBRA notices must accurately reflect your current plan terms, premium costs, and administrative contacts. Update them at every renewal.
- Work with a benefits advisor. A broker who specializes in Washington State employer benefits can audit your COBRA process, update your notices, and handle administration through a TPA partnership, keeping your company out of the penalty zone.