COBRA Administration

What is COBRA?

What is it?
In 1985 the United States Congress passed into law the Consolidated Omnibus Budget Reconciliation Act (COBRA).  The health benefit provisions of COBRA provide that employees who would otherwise lose coverage under their employer’s group health plan due to a qualifying event may continue that coverage for a specified period of time. An employer (with more than 20 employees) is required to inform its employees of their COBRA rights and provide statutorily required services in continuing the health coverage.
 

Why is it important to your company?
Failure to comply with COBRA requirements invokes costly federal penalties on employers.  During a “noncompliance period,” the sanction for the employer is $100.00 per day per covered individual from the IRS and $110.00 per covered individual from the Department of Labor!
 

What is involved in complying?
Administering COBRA is a very complicated process.  The employer must use written notices that are up-to-date with federal statutes, case law, and regulations; the notices must be complete and correct.   An important element is maintaining detailed records in a COBRA file for each employee (and their spouse!).  The employer must monitor those records to ensure that all required activities have been performed for qualifying events.   A critical task is tracking dates and case development for each qualified beneficiary.  Continued coverage may be required by law for either 18, 29, or 36 months depending upon the circumstances of the qualifying event.  Multiple qualifying events require recalculation of the continuation period.  Premiums for the cost of coverage must be collected monthly from beneficiaries.  Termination and reinstatement of continuation coverage under COBRA are additional requirements.
 

Why use EBM?
We  perform the tasks described in the paragraph above and administer a comprehensive COBRA compliance program.  We specialize in administering employee benefit plans, including COBRA.  We offer our clients a TURNKEY solution.  It's one of the wisest investments your company can make!
 

    Provide proper written notice to all covered employees and their spouses, if any, of their COBRA rights.

    Provide proper written notice to new hires and their spouses, if any, of their COBRA rights at the beginning of their health plan coverage.

    Create and maintain a COBRA file for each employee with health plan coverage.   The file will document all actions taken with regard to compliance with COBRA requirements.

    Receive and document notification of a qualifying event from the employer (in cases of termination, reduction in hours, death, Medicare coverage, or bankruptcy) or from the qualified beneficiary (in cases of certain disabilities, divorce, legal separation, or loss of dependent child status).

    Within 14 days of receiving notification of the qualifying event,  provide proper written notice to qualified beneficiaries of their COBRA rights to continue health coverage benefits.

    Allow qualified beneficiaries 60 days after receiving notice to elect continuation coverage, and document all actions taken in this regard.

    Determine whether coverage continuation is to extend 18, 29, or 36 months depending upon the circumstances of the qualifying event.

    Collect monthly premiums from COBRA participants and transmit the cost of coverage of the health plan to the Client.

    Terminate the continuation period if the qualified beneficiary does not make premium payments in a timely manner, obtains coverage under another group health plan, or becomes entitled to Medicare coverage.

    Take the necessary administrative actions to reinstate health coverage for  qualified beneficiaries when required by law.

    Respond to questions from Client and Client's employees regarding COBRA administrative services.