COBRA Administration

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires employers with over 20 employees to offer the option for continued benefit coverage should an employee lose coverage for such things as termination of employment, reduction in hours, divorce, turning age 26, etc. In addition, most states require continuation of coverage for group plans with less than 20 employees.

COBRA is a maze of rules, required notices and procedures that are critical in order to avoid a legal dispute, fines, and penalties. The consequences of non-compliance can be serious. HR Service, Inc. provides highly skilled people to do COBRA implementation and ongoing administration based on proven standards and best practices developed over 20 years of business.

How long do I have to decide if I want COBRA coverage?

You will have an election period of at least 60 days to decide whether to continue your health plan with COBRA or to seek coverage through the Health Insurance Marketplace, through a spouse’s employer or Medicaid. 

What counts as a qualifying event for COBRA? 

According to the U.S. Department of Labor, the following are qualifying events for covered employees:

• Termination of the employee’s employment for any reason other than gross misconduct
• Reduction in the number of hours of employment 

The following are qualifying events for the spouse and dependent child of a covered employee:

• Termination of the covered employee’s employment for any reason other than gross misconduct
• Reduction in the hours worked by the covered employee
• Covered employee becomes entitled to Medicare
• Divorce or legal separation of the spouse from the covered employee
• Death of the covered employee
• Loss of dependent child status under the plan rules (plans that offer coverage to children on their parents’ plan must make the coverage available until the adult child reaches the age of 26) 

How much does COBRA health insurance cost?

It costs the same as your previous monthly health plan, plus a 2 percent service charge.

However, because you will now be responsible for the premiums that were once subsidized by your employer, your parents’ employer, or your spouse’s employer, the monthly cost shouldered by the consumer are much more significant. On average, employers pay nearly 82 percent of the cost of their employees’ health insurance, and almost 70 percent of the total family premium, so this means COBRA insurance can be up to 82 percent costlier for a consumer than their previous monthly payment. 

How long does COBRA coverage last? 

COBRA Required Notices

By law, COBRA continuation coverage can extend from between 18 to 36 months, depending on the type of qualifying event. Individual plans may provide more extended periods of coverage. 

• General (Initial) Notice to newly enrolled, active employees and, if applicable, spouses, with USPS proof of mailing.
• Initial Qualifying Event Notice and Election Form to qualified beneficiaries, with USPS proof of mailing.
• COBRA Extension Notices, due to second qualifying event and Social Security disability.
• Early Termination Letter, if COBRA coverage is terminated early for any reason
• Insufficient Premium Letter, sent to COBRA participant whose underpayment is less than or equal to 10% of the total premium due, but no more than $50.00.

COBRA Courtesy Notices

Late Payment Reminder sent on or around the 20th of each month to any participant whose premium payment has not yet been received

Partial Payment Letter sent to COBRA participant whose underpayment does not fall within the “insufficient premium” guidelines above and will lose coverage at the end of the month unless payment for the balance owing is made timely

Maximum Continuation Notice – sent 6-8 weeks prior to the end of a participant’s maximum continuation period, as an alert, and again after COBRA exhausts

Reporting and Monthly Accounting

Reports are provided after the close of the prior month. The customer has 24/7 access to interim activity reports and prior months’ audited reports in an online MyCOBRA account.