COBRA stands for “The Consolidated Omnibus Budget Reconciliation Act of 1985”. It is the federal law that requires certain employers to offer their employees (and their qualified beneficiaries) continued coverage in the companies group sponsored medical insurance plan in the event of an employee losing eligibility (i.e. leaving the company or being fired). If an employee chooses to enroll in COBRA, they will be able to stay on the companies medical plan but must do so at their own expense, meaning that they have to pay the full amount of the monthly premiums.
COBRA is a maze of rules and regulations and failure to administer a COBRA application correctly can land the company in hot water with the DOL and IRS. It is no surprise that many employers find COBRA to be confusing and overwhelming. B3PA wants to help clear up some of the confusion and help employers find a manageable solution for their COBRA need.
Here are some of the most common COBRA FAQs.
Q: What types of employers are required to offer COBRA?
A: Any employer with 20 or more full-time or full-time equivalent employees must have a COBRA administration procedure in place.
Q: What employees does the employer have to offer COBRA to?
A: Any employee who is or becomes eligible for the group insurance plan must be made aware of their rights to COBRA.
Q: Do employees need to know about COBRA?
A: Yes! It is up to the employer to communicate to employees their right for continued benefits once they become eligible for benefits AND once a “qualifying event” happens.
Q: What are “qualifying events”?
A: A qualifying event is any situation where the employee (and/or their qualified beneficiaries) loses their eligibility in the group health plan. This includes employment termination, reduction in hours, divorce, death, or other similar events.
Q: How long does COBRA coverage last?
A: Depending on the qualifying event, coverage lasts for 18 or 36 months after the initial date of the event.
Q: Is there any time in which COBRA should not be offered to an employee?
A: If an employee does not meet the eligibility requirements for the group health plan (i.e. they only work part-time and benefits are only available to full-time employees) they do not need to be offered COBRA. Also, if an employee is terminated for “Gross Misconduct”, they do not need to be offered COBRA.
Q: Do I have to pay a premium?
A: Plans cannot require qualified beneficiaries to pay a premium when they make the COBRA election. Plans must provide at least 45 days after the election (that is, the date the qualified beneficiary mails the election form if using first-class mail) for making an initial premium payment. If a qualified beneficiary fails to make any payment before the end of the initial 45-day period, the plan can terminate the qualified beneficiary’s COBRA rights. The plan should establish due dates for any premiums for subsequent periods of coverage, but it must provide a minimum 30-day grace period for each payment.
Q: How does B3PA make it easy to manage COBRA?
A: B3PA is set up to take all of the stress and administration hassles COBRA off of the employer’s plate. Our state of the art COBRA administration portal is designed to manage all of the COBRA requirements for the Employer. The only thing the employer has to do when an employee has a qualifying event is to make one update to the employee in their COBRA portal – B3PA takes care of the rest.
- We will mail out all notices and COBRA election paperwork to the employee
- We collect the employees’ premiums and forward them on to the employer
- We notify the insurance carrier of any eligibility change while the employee is on COBRA
- We track the employees’ eligibility progress and terminate their COBRA once the 18 or 36 month coverage period expires.
- We can even provide initial COBRA eligibility notices to new hires if needed.
Q: What if an employer has questions about special COBRA circumstances?
A: B3PA provides all employers with a dedicated account manager that the employer can contact with any questions or concerns.
Additional information can be found by visiting: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra