Employers bear the burden of administering benefits correctly and abiding by federal laws. One in particular, known as COBRA (Consolidated Omnibus Budget Reconciliation Act), was established in 1985 and revised in 1999 in order to help protect those individuals who lose their employer-provided health group coverage to life events such as termination, a new job, divorce, or the death of a covered employee. In addition to the employee, the coverage is also extended to spouses, dependent children, and former spouses when coverage is lost to certain life events. These individuals can then continue coverage at a higher premium. So if you are an employer with 20 or more employees and you provide group health coverage, what is your responsibility when it comes to COBRA?
• Sending Out Notifications – The employer must communicate with the employee and family about their COBRA rights within specified time frames. These include but are not limited to the Summary Plan Description, COBRA General Notice, and COBRA Qualifying Event Notice.
• Determining Qualifying Beneficiaries and Events – Who is eligible for continuation coverage? It can be as obvious as the employee and spouse, and as subtle as a retired employee’s former spouse. Also, what events trigger COBRA coverage? Depending on who it is – employee, dependent, spouse – determines what events make them eligible.
• Determining Coverage Duration – COBRA extends from the date of the qualifying event for a certain amount of time and in certain circumstances, the employer can terminate coverage early or further extend coverage.
• Collecting Payment – Employers cannot charge more than 102% of the plan cost to beneficiaries and must follow rules applying to payment collection, increase allotments, and time frames.
• Coordination with Other Federal Benefit Laws – FMLA (Family Medical Leave Act) and PPACA (Patient Protection and Affordable Care Act) impact COBRA in their own unique ways and must be managed accordingly.
Consider outsourcing your HR and get the benefits of COBRA administration to take the burden off your company. CPEhr has experts who are well-versed in benefits administration who would be happy to help. Please contact us for your human resource needs!