COBRA

What is COBRA? Employer groups with 20 or more employees are subject to Federal COBRA laws. The Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") was passed to temper the increasing rate of uninsured Americans. As a result of economic recession in the early 1980's, many working Americans lost their jobs, and these job losses initiated loss of employer-sponsored health coverage for those workers and their families. The continuation coverage requirement forces employers to offer insurance continuation to anyone who would otherwise lose coverage due to a qualifying event. A qualifying event is any one of the following that causes a loss of coverage: Termination of employment or reduction of hours Divorce or legal separation Death of the covered employee Covered employee becomes entitled to Medicare Dependent ceases to be eligible as a dependent under the terms of the plan Employer's filing of a bankruptcy proceeding (applies only to retirees) In addition, employers must provide written notification to all covered employees and their dependents of their rights under COBRA. This notification of rights must be provided (1) upon inception of coverage, (2) in the summary plan description, and (3) upon the occurrence of a qualifying event. COBRA is jointly enforced by the Internal Revenue Service, the U.S. Department of Labor and the Department of Health and Human Services. Penalties for COBRA violations include but not limited to: Excise tax penalties of $100 per day ($200 if more than one family member is affected) may be assessed for each day the employer fails to comply with COBRA Statutory penalties of up to $110 per day under the Employee Retirement Income Security Act ("ERISA") Civil lawsuits Attorney's fees and interest Is My Organization Required to Offer COBRA to Employees? To be subject to COBRA, your organization must have employed 20 or more workers on at least half of your regular business days in the last calendar year, and you must currently provide a group health plan. Group health plans include the following benefits: Medical insurance Dental insurance Vision insurance Medical reimbursement flexible spending accounts Employee Assistance Program (EAP) that provides more than referrals Prescription drug plan If your organization is subject to COBRA, you should be able to answer "yes" to all of these questions: Do you provide Initial COBRA Notifications to covered employees and their dependents once they become covered by your group health plan(s)? Are employees and their dependents given an opportunity to continue their coverage when a qualifying event occurs? Can you prove that you provide Initial COBRA Notifications and COBRA election information, and that this information is provided within the time period mandated by COBRA? Do you know what the qualifying events are under COBRA? Are you complying with HIPAA privacy and portability rules? Are you complying with the COBRA timelines? Do you know how long you have to send a COBRA notice after a qualifying event occurs? How long the election period is? What the two grace periods for payment of premium are and the duration of each? Do you adjudicate eligibility and participation consistently? Are you monitoring the effect of COBRA participants on your experience rating? Are you maintaining COBRA records? Do you know how long you are required to store these records before they may safely be destroyed? Do you know the penalties and liabilities associated with COBRA violations? Did you know that COBRA violations are not covered by General Liability insurance? What are my COBRA Administration Options? Use a COBRA Administrator (fee based); links available upon request Use COBRA Administration software (fee based) Educate yourselves and do administration in house Sample Forms Notice of Right to Elect COBRA - Qualifying Event Notice Certificate of Group Health Plan Coverage HIPPA (INOYRTDOHC) Receipt of COBRA Documents Price Sheet Template Discontinuance Notice

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