Guide To COBRA Insurance Employer Responsibilities
In response to the COVID-19 National Pandemic, the American Rescue Plan Act of 2021 has placed increased responsibilities and timelines for employers. The following information is regarding the COBRA Insurance Act alone.
What Employers Are Required To Provide COBRA Benefits?
The Consolidated Omnibus Budget Reconciliation Act of 1985, also known as COBRA, is a federal law requiring private businesses with 20 or more employees to provide their workers and qualified beneficiaries the option to continue their group health benefits if those benefits were to end. Some states have similar insurance continuation laws, sometimes called “Mini-COBRA” that apply to companies with 19 or fewer workers. The insured individuals electing COBRA continuation pay the full premium payment and should have access to the same benefits plan.
Who Is Entitled To COBRA Benefits?
Any employee that has been enrolled in a company’s group health plan for 1 day qualifies for COBRA benefits. When an employee signs up for workplace insurance, you must notify them of their COBRA rights to continuation if that insurance would end. You must make the option available to all qualified beneficiaries of the plan.
A qualified beneficiary is a health insurance plan dependent, such as spouses and children. As an example, if the covered employee dies, the spouse and other covered dependents shall be given the option to continue the same health insurance they had.
What Triggers A COBRA Open Enrollment?
In general, when the employer no longer subsidizes an employee or a qualified beneficiary’s health insurance premium, the company must create a special open enrollment period to allow those individuals an option to continue their health insurance. What triggers the open enrollment period is called a qualifying event. When a qualifying event occurs the company no longer is obligated to subsidize the insurance premium.
- An employee voluntarily quits their job.
- The worker was laid off, terminated or fired.
- A reduction in hours (full-time to part-time).
- An employee retires before qualifying for Medicare.
- A covered spouse was legally separated or divorced from the employee.
- A dependent child turns 26 years of age.
- Death of the covered employee.
- The business went bankrupt.
An act of gross misconduct may be defined as an action intentional, wanton, willful, deliberate, reckless or in deliberate indifference to an employer’s interest. An employer may withhold continuing coverage under these circumstances.
Affordable COBRA Alternatives
Free Worker Consultation
COBRA continuation can be very expensive. If you have an employee that needs to talk about their options, our licensed call center is ready to help.
Employer COBRA Notification Responsibilities
The federal COBRA law requires employers to maintain a timeline of notifications. Employers have a total of 44 days from the date of the qualifying event to notify the employee of their right to COBRA benefits. Specifically, employers must notify the group health plan administrator within 30 days of the employee’s termination or reduction in hours. After that notification, the employer has 14 days to give the employee the option to continue the current health insurance plan.
A COBRA Rights Notification Should Include
- A written explanation of the procedures for electing COBRA insurance.
- The date by which the election must be made.
- How to contact the plan administrator of the election.
- The date the COBRA coverage will begin.
- The maximum period of continuation coverage.
- The monthly COBRA premium amount.
- The due date for the monthly payments.
- Any amount due for premiums incurred during a retroactive period of coverage.
- The address to which to send premium payments.
- A qualified beneficiary’s rights and obligations with respect to extensions of COBRA coverage.
- The bases for early termination of the period of COBRA coverage.
Remember, the responsibility for mailing notifications falls on the employer and not the insurance company.
Employees Response To COBRA Notification
An employee has up to 60 days to elect COBRA coverage or waive their right to continue their same workplace health benefits after the employer has sent notification. If an employee takes the option to continue their insurance, the employer will need to notify the plan administrator to restart insurance with no lapse in coverage.
Length Of COBRA Coverage
If the qualifying event for COBRA coverage was a workplace separation, an employee or qualified beneficiary may stay on the group health plan insurance benefits for up to 18 months. Workplace events are reduction in hours, voluntary (including retirement) or involuntary termination of employment. Where the qualifying event was due to spousal separation, divorce, death of the covered employee or a child ceases to be a dependent, then COBRA must be offered for up to 36 months.
Get Help With Managing Workplace COBRA
Third-Party Administrators (TPA) can help manage notifications, timelines, payment collections and insure federal compliance. Make sure to select a reputable third-party. Get started using a TPA for COBRA administration. The law makes the process the employer responsibility.
Who Pays For COBRA?
The employer’s costs to the health insurance company remains the same as the insured will have the exact same policy. The employer will need to collect the premium payment from the covered individuals. By law, all individuals covered under COBRA are to be given a 30 days grace period to make a monthly premium payment.
Outsource Your COBRA Administration With A TPA
Providing the continuation of health insurance benefits and maintaining communication is the legal responsibility of the employer. When you have former employees with COBRA benefits there’s a lot of tracking involved. You will need to keep track of notices sent to employees and dependents, collect monthly premiums and be sure they are included in your group health plan’s open enrollment time.
The COBRA law allows for an additional 2% that may be added to the monthly premium for administration costs. Take the stress out of this and partner with a Health Insurance Third Party Administrator also known as a TPA. When you outsource your COBRA administration, not only are you freeing up your HR Departments resources, you simply no longer have the headaches.
COBRA Insurance Administration
Third Party Administration Services:
- Processing Claim Paperwork
- Federal Affordable Care Act Compliance
- Transparency In Process
How Can We Help With Your COBRA Administration?
CobraInsurance.com is a direct-to-consumer health insurance agency that helps workers in-between jobs enroll in affordable health plans.
We are a nationally licensed and recognized health insurance agency looking to sincerely help people access and understand insurance. Over the past 20 years, over 4 million people have obtained insurance through SASid, Inc technologies.