Truth be told, it’s no easy task being responsible for COBRA management. But your business can end up showing out an awful lot of money if you end up missing a deadline and being assessed out of compliance penalties. To try to help businesses avoid this headache, we’ve put together several of the most common mistakes seen in COBRA management.
First Things First – What’s COBRA?
The acronym COBRA actually stands for Consolidated Omnibus Budget Reconciliation Act. It basically gives dependents of employees, and the employees themselves, the right to continue group health insurance and pay premiums for it after certain qualifying events. These events could be as following:
- A covered employee’s becoming Medicare entitled
- A child’s loss of dependent coverage/status under the plan
- Legal separation or divorce of a covered employee and spouse
- Reduction in work hours or termination of an employee (gross misconduct excluded)
- The death of a covered employee
The Three Most Common Mistakes In COBRA Management
We will discuss COBRA further, but first, the three most common mistakes referred to earlier.
- Recognizing qualifying events and informing employees of them.
- Within 90 days of coverage, forgetting or neglecting the distributing of notices to all employees eligible for COBRA.
- Assuming that only vision, dental, and medical plans apply to COBRA.
Should COBRA Be Offered to Your Employees?
If your business employs 20 or more people, whether they are full-time or part-time, you have to offer COBRA coverage – it is a requirement. Additionally, you must notify them that COBRA coverage exists.
The following is per the Department Of Labor: Group health plans need to provide covered families of employees, and the covered employee themselves, certain notices detailing their rights as they apply to COBRA. Rules applying to the continuation of COBRA coverage offered most be included in the plans. If, within the regulation time established, a business fails to send out these required notices, steep penalties could result.
Under COBRA, What Benefits Are Covered?
All group health plans are covered if your business is subject to COBRA. These health plans can include the following:
- Some Employee Assistance Plans
- Health FSA’s
Here Are Some Typical COBRA Questions
Q: Is there any way to get out of offering COBRA continuation? A: As mentioned earlier, COBRA only applies for businesses where 20 or more employees work. If you have less than 20 employees, you don’t have to offer COBRA.
Q: What would cause an employee to be ineligible for COBRA? A: If they were fired, or they quit, an employee is eligible for COBRA. The only time that they would be deemed ineligible is if they were fired for reasons of “gross misconduct”.
Q: Can COBRA insurance be extended? A: For an additional 11 months, you or your family may qualify for extended COBRA coverage. (Premium costs apply.)
Q: If an employee retires, is COBRA insurance offered? A: The same rules apply here as apply to an employee quitting. Even if retirement is the reason for quitting, for at least 18 months, the continuation of the employer’s health plan must be offered, thanks to COBRA.
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