In the ever-evolving world of employee benefits, one HR responsibility continues to stand out as one of the most consistently outsourced: COBRA administration. According to a survey conducted by the International Foundation of Employee Benefit Plans (IFEBP), 79% of employers outsource their COBRA responsibilities, nearly claiming the top spot of the most outsourced functions in the HR space. As noted by HR Executive, that’s an increase from just 64% of employers outsourcing COBRA in 2015.
This isn’t just a trend – it’s a reflection of the increasing complexity, risk, and administrative burden tied to COBRA compliance. While some employers still manage COBRA in-house, the overwhelming majority now view it as a task best handled by specialists.
The Rise of COBRA Outsourcing
COBRA has always required strict adherence to federal guidelines. Employers must provide timely notices, maintain accurate eligibility tracking, manage premium collection, and navigate a shifting regulatory landscape. But over the years, the compliance burden has grown and so has the risk and penalties, making COBRA more difficult to manage without dedicated expertise.
For most HR teams, especially those at small or mid-sized companies, COBRA is an infrequent but high-stakes task. A single misstep can result in financial penalties and legal exposure. That’s a difficult proposition for teams already stretched thin across recruiting, onboarding, payroll, and broader benefits administration.
COBRA outsourcing became an appealing solution not just to offload the complexity, but to gain confidence that these critical tasks would be handled correctly and consistently.
Why Employers Turn to COBRA Vendors
There are a few clear reasons employers choose to outsource COBRA:
First, there’s the risk. COBRA rules are unforgiving, and penalties for noncompliance can quickly add up. Missed deadlines or improperly handled notices can result in fines of $110 per day per affected individual. For employers without the time or expertise to stay current with every regulation, outsourcing acts as a layer of protection.
Second, there’s the strain on internal resources. Even a small number of COBRA events can disrupt an HR team’s workflow. Outsourcing gives employers peace of mind that notices are sent on time, payments are tracked accurately, and compliance is maintained, without pulling staff away from their day-to-day responsibilities.
Third, many employers want to avoid the awkward dynamic of managing COBRA with former employees. Outsourcing creates a neutral third-party buffer, maintaining professionalism and reducing friction.
Finally, it’s often simply more cost-effective. When you factor in the time it takes to train staff, manage notices, and stay compliant – not to mention the cost of a potential audit or lawsuit – COBRA outsourcing can save money in the long run.
A Natural Fit for Outsourcing
COBRA isn’t a daily task but when it does come up, it requires immediate, precise action. That makes it one of the most disruptive HR responsibilities to keep in-house.
Ultimately, COBRA sits at the intersection of complexity, risk, and low frequency, all qualities that make it a natural fit for outsourcing. As employers increasingly rely on vendors to handle regulatory-heavy functions, COBRA continues to top the list of HR responsibilities they’re eager to offload.
TASC COBRA Is the 1st Choice for Employers Looking for COBRA Outsourcing
As we’ve discussed, COBRA outsourcing is not just a temporary fad, it’s a response to the increasing demand and risk placed on employers to maintain compliance. That’s why TASC is the top choice for one of the top-outsourced HR functions. Our COBRA administration will help your organization see cost savings over administering in-house, while giving you the peace of mind that you’re reducing your risk and liability. With easy-to-use online tools, comprehensive web portal and mobile app, and access to experienced employee benefits experts, there’s no better choice to handle your COBRA responsibilities.
We even offer State Continuation administration that covers state-specific requirements that add-on to federal COBRA requirements so you’re covered no matter where your company operates across the country!
Don’t wait to ensure compliance and save – request a proposal for TASC COBRA today!
