What is COBRA?
The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more full-time and/or part-time employees to continue offering group health insurance to employees and their dependents upon the occurrence of a qualifying event. In addition, many states extend COBRA requirements to employers with less than 20 employees.
COBRA requires that employers follow specific guidelines when notifying individuals of their benefit continuation rights under Health and Welfare plans. Employers may face heavy government fines and penalties if found in non-compliance of COBRA requirements. Excise penalties for unintentional administration failures can be as high as $100 per affected person per day of non-compliance, up to a maximum of $500,000. Examples of failures that would trigger excise taxes are COBRA notice failures (missing, late, or incomplete initial or qualifying event notices); COBRA premium violations (overcharging, or not complying with grace period rules); and procedural failures such as not allowing COBRA recipients to make changes at open enrollment, or on special enrollment events.
This ever-changing bundle of legislation is closely monitored to ensure the plan is administered using the most current legal understanding of COBRA. All administration duties are processed accurately and efficiently to ensure compliance with COBRA. Because of the challenges of keeping up with changing federal and state COBRA laws, many employers are following the trend of turning to professional administrators for their COBRA continuation services.
List of COBRA Administration Services
- Preparation and distribution of Initial COBRA Notification to any newly eligible employee enrolled in group health, dental, vision, prescription drug or flexible spending account.
- Preparation and distribution of Initial COBRA Notification to any newly enrolled spouse or dependent in a group health, dental, vision, prescription drug or flexible spending account.
- Preparation and distribution of Qualifying Event COBRA notifications sent to any eligible employee, spouse or dependent that has experienced a qualifying event that results in a loss of coverage.
- Tracking of all applicable time frames for COBRA continuants, including state Mini-COBRA.
- Conversion notification to all COBRA continuants upon the cessation of their COBRA benefits.
- Termination of coverage notice prepared for all participants at the time their COBRA continuation coverage ends.
- Notification to all COBRA continuants for open enrollment.
- Notification to all COBRA continuants of plan and premium rate changes.
- Monthly direct billing of COBRA continuants.
- Monthly remittance of collected COBRA premiums to employer for payment to the carrier.
- BenefitsPlus of New York, LLC will retain the 2% administrative fees collected from COBRA continuants.