COBRA Early Termination Notice

Tells qualified beneficiaries when their continuation coverage will end before the maximum period, and must go out promptly whenever an early termination trigger occurs.

See the Step-by-Step ProcessView Model Notice
Worth knowing before you start: This notice is less well-known than the election notice, but it's required every time COBRA coverage ends before the maximum period, regardless of the reason. Some triggers are obvious (nonpayment), but others are easy to miss, particularly when a beneficiary gains coverage elsewhere and doesn't tell you. If you're handling COBRA in-house, your process needs to catch every early termination, not just the common ones.

Prefer not to do it yourself? ABY can help.

Administering COBRA means multiple required notices, strict deadlines, and real penalties if something is missed, so many employers hand it to a third-party administrator. ABY can take COBRA administration off your plate.

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What Written notice that COBRA continuation coverage is ending before the maximum period, stating the reason and termination date.
Who Employers with 20+ employees sponsoring a group health plan; the plan administrator sends the notice to each affected qualified beneficiary.
When As soon as practicable after the plan administrator determines coverage will end early. Thirty days is the widely-used practical guideline, though the regulation does not set a hard deadline.
Risk IRS excise tax of $100 per day per qualified beneficiary under IRC §4980B ($200/day when multiple family members are affected by the same qualifying event), plus up to $110 per day per beneficiary in court-assessed ERISA §502(c)(1) penalties. Employers may also face lawsuits and liability for uncovered medical claims during the gap.
Trigger Timing Who Sends Notes
COBRA ends early (for example, beneficiary gains other group coverage, becomes entitled to Medicare, fails to pay premiums, obtains coverage through fraud, or employer ceases the health plan entirely) As soon as practicable; 30 days is the standard guideline Plan administrator (employer or TPA) Send to each qualified beneficiary (employee, spouse, and dependents) individually.
Trigger: COBRA ends early (other coverage, Medicare, nonpayment, fraud, plan ceases)
Timing: As soon as practicable; 30 days is the standard guideline
Who sends: Plan administrator (employer or TPA)
Notes: Send to each qualified beneficiary individually.
  • Names and last known mailing addresses for the employee and each qualified beneficiary (spouse, dependents).
  • The reason for early termination and the exact coverage end date.
  • Plan name, plan type, and plan administrator contact information.
  • Information about any conversion rights available under the plan (if applicable).
  • Your mailing log template; see the Model Notice section below.
1
Confirm the triggerIdentify the reason COBRA is ending early and the exact termination date.
2
Identify all affected beneficiariesInclude the employee, spouse, and each covered dependent; each receives their own notice.
3
Prepare the noticeUse the template in the Model Notice section below; fill in the beneficiary details, termination date, reason, and any conversion rights.
4
Send promptlyMail first-class to each beneficiary's last known address; use a Certificate of Mailing (USPS Form 3817) for a dated, stamped record of when you deposited the notice.
5
Log and retainRecord the date, method, and recipient for each notice sent, and store with your COBRA event log.
  • Who receives it: Each qualified beneficiary at their last known mailing address; do not rely on a single household addressee.
  • Method: First-class mail to the last known address is the legal standard and creates a presumption of receipt under ERISA.
  • Proof of mailing: A Certificate of Mailing (USPS Form 3817), available at the post office, provides a dated, stamped record of when you deposited the notice, without the complications of certified mail.
  • Electronic delivery: Permitted only if the DOL's ERISA electronic disclosure safe harbor rules are met.
  • Presentation: Send as a stand-alone notice; don't bury it in unrelated plan communications.
  • Notice copiesCopy of each early termination notice, with all fields completed as sent.
  • Mailing logDate, method, and recipient name and address for each beneficiary.
  • Supporting documentationEvidence of the termination reason (such as premium payment records, evidence of other coverage, plan termination records).
  • Retention periodRetain all COBRA records for at least 6 years per ERISA's general recordkeeping standard.

Common traps

Sending only to the employee: Each qualified beneficiary (spouse, dependents) is entitled to their own notice.
Waiting until the next billing cycle: Send as soon as practicable after the termination trigger occurs.
Not knowing the beneficiary gained other coverage: Build a process to actively check, since beneficiaries often don't report it.
No proof of mailing: Keep a log and use a Certificate of Mailing for each notice sent.

FAQs

What triggers an Early Termination Notice?
The notice is required whenever COBRA ends before the maximum continuation period. Common reasons include: the beneficiary gains other group health coverage, becomes entitled to Medicare, fails to pay premiums on time, obtained coverage through fraud or misrepresentation, or the employer ceases the group health plan entirely.

What's the deadline?
The regulation requires the notice "as soon as practicable" after the plan administrator determines coverage will end early. Thirty days is the standard guideline practitioners follow, though it is not a hard statutory deadline.

What are the penalties for a late or missing notice?
IRS excise tax of $100 per day per qualified beneficiary under IRC §4980B ($200/day for multiple family members from the same event), plus up to $110 per day per beneficiary in court-assessed ERISA §502(c)(1) penalties. Employers may also face lawsuits and liability for the beneficiary's uncovered medical costs.

Does the notice need to include conversion rights?
Yes, if the plan offers a right to convert to individual coverage, the notice must include information about how to exercise that right.

  • Mini-COBRA: Below the federal 20-employee threshold, your state's continuation-coverage law may apply and may set its own early-termination requirements and timelines. See the State Continuation Election Notice page.
  • Conversion rights: If your plan includes a right to convert to individual coverage, this must be disclosed in the notice. Confirm with your carrier whether conversion rights exist under your plan.
  • Multiple EINs / controlled groups: Clearly identify the plan sponsor and plan administrator in the notice, particularly in related-entity situations.

Unlike the General and Election Notices, the DOL does not provide an official model template for this notice. Use the language below; fill in the bracketed fields for each qualifying event.

NOTICE OF EARLY TERMINATION OF COBRA CONTINUATION COVERAGE

Date: [Date of Notice]

To: [Qualified Beneficiary Name]
[Mailing Address]

This notice is to inform you that your COBRA continuation coverage under [PLAN NAME] will end earlier than the maximum continuation period.

Coverage termination date: [Date]

Reason for early termination: [Select the applicable reason:]

  • You have become covered under another group health plan
  • You have become entitled to Medicare benefits
  • Required premium payment was not received by the due date
  • The employer has ceased to maintain any group health plan
  • Coverage was obtained through fraud or material misrepresentation

[If applicable, include only if your plan offers conversion rights:]
Conversion rights: You may have the right to convert your continuation coverage to an individual policy. To exercise this right, contact [CARRIER NAME] at [CARRIER PHONE / ADDRESS] within [NUMBER] days of the date your coverage ends. Conversion rights are not available unless your plan specifically provides for them.

If you have questions about this notice, please contact:

[PLAN ADMINISTRATOR NAME / HR DEPARTMENT]
[Mailing Address]
[Phone Number]
[Email Address]

This notice is provided pursuant to 29 CFR § 2590.606-4.