Guide To COBRA Insurance Employer Responsibilities
Understanding Legal Requirments To Continuing Health Insurance Coverage For Your Employees
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 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.
Employer COBRA Notification Requirements
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.
Penalties For Not Complying
Your company can be fined $500,000 annually or 10% of the past year’s total health care costs.
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.
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.