by Sara Flowers
COBRA can be intimidating for benefit professionals and employer groups. COBRA has been around since 1985, and continues to be a small, but very important aspect of the employee benefit world. Employer groups rely on benefit professionals to help them navigate the rules and regulations of COBRA in the midst of an already complex healthcare industry.
COBRA involves liability, notices, timeframes, eligibility monitoring, and regulatory changes. It is important for benefit professionals to understand COBRA, familiarize themselves with required timelines and, determine the options employers have to comply with COBRA.
Simply put, COBRA is the continuation of benefits after a qualifying event. COBRA is not limited to the medical plan. Dental, vision, FSA, and HRA plans are also COBRA-eligible benefits, among others. Active employees who are enrolled in a COBRA-eligible plan should receive a General COBRA Rights Notice. When a qualifying event occurs, COBRA election paperwork, often referred to as the “Specific Rights COBRA Notice,” should be sent within specific timeframes. Failure to comply with the timeframes given by the Dept. of Labor may result in financial penalties and other consequences for the employer.
The General COBRA Rights Notice should be sent within 90 days of the active employee becoming covered under a COBRA-eligible plan. When a qualifying event occurs, the employer has 30 days to notify the plan administrator of the event. Common qualifying events include termination, retirement, and reduction in force. Different timeframes apply if the qualifying event is divorce or the loss of dependent status. Once notified, if the group uses a third party administrator, the administrator has 14 days to send the COBRA paperwork to the qualified beneficiary. The qualified beneficiary has 60 days to elect COBRA coverage. Once COBRA is elected, a 45-day initial payment grace period is provided. The payment grace period is 30 days moving forward.
Employers have the option of administering COBRA in-house. If COBRA is administered in-house, full liability is placed on the group and compliance with all regulations and deadlines must be met. The group is responsible for communicating with carriers, qualified beneficiaries, and their family members about COBRA issues. The group also tracks, processes, and remits all insurance premiums paid by the qualified beneficiaries. Employers can also outsource COBRA to a third party. Potential advantages of outsourcing COBRA include the third party accepting all COBRA liability under its control. Depending on the scope of services, another potential advantage for employers is off-loading many of the tasks and responsibilities that can come with COBRA. Administrators often only require employers to notify them when someone is added to group coverage and when there is a COBRA qualifying event. Finally, managing COBRA has the potential to cause hassles and highly emotional situations. Outsourcing to an expert can separate the employer from these timeconsuming and sensitive challenges.
There are a lot of moving parts to COBRA. Familiarizing yourself with the basic regulations, timelines and administrative options goes a long way professionally and personally. A strong COBRA management strategy saves employers both time and money.
Sara Flowers is a marketing coordinator at Discovery Benefits. She earned her B.S. in public relations from North Dakota State Univ. Discovery Benefits is a third party administrator for reimbursement accounts and COBRA. For more information, visit www.discoverybenefits.com.