The next interaction is important for employers to know.  When any qualified beneficiary (including the employee) becomes entitled to Medicare BEFORE their qualifying event they may still elect COBRA and the minimum coverage period cannot be ended early due to Medicare entitlement.  COBRA must be offered in this situation. 

One interaction we’ve experienced with participants is Medicare entitlement as a second qualifying event for the spouse and dependents.  In this situation, the employee, spouse and dependents are on COBRA due to a termination or reduction of hours, and then sometime after electing COBRA, the employee becomes eligible for Medicare.  At this point, when the employee becomes covered by Medicare, the spouse and/or dependents coverage period may be extended to 36 months.   This information can be comforting knowing that the spouse and dependents will have access to comprehensive and continued healthcare coverage for an extended period.

What other questions do you have, or have you received about the effects of Medicare entitlement on COBRA?  Contact an Ally now at cobraallies.com, and we’d be happy to talk through it with you.

The documents needed for a compliant POP are :

• Premium Only Plan Document outlining eligibility criteria, employee contribution limits and procedures for making elections or changes.
• Summary Plan Description which must be shared with participants, informing them of their rights and benefits.
• Enrollment Forms which indicate participation by an employee as well as their contribution level.
• Salary Reduction Agreement allowing the employer to deduct premiums pre-tax.

The penalties for a non-compliant Premium Only Plan range from the loss of tax advantages, penalties and fines by the IRS, or an increased exposure to IRS Audits for the employer.  To avoid non-compliance, employers are advised to work with a benefits administrator, legal experts, or consultants who specialize in POPs, as well as to conduct regular review, often annually, to ensure the plan remains aligned with current regulations.

Implementing a Premium Only Plan can offer tax-savings benefits for both employers and employees.  Contact COBRA Allies at cobraallies.com to speak with our POP experts.  We look forward to hearing from you and helping your company start saving money. 

A wrap document is a single plan document that incorporates all of the required provisions for each benefit plan sponsored by an employer. It wraps together the insurance policies, benefit plan summaries, and other required documents to provide a comprehensive summary of the benefits offered to employees.

The purpose of a wrap document is to help employers comply with various federal regulations, such as ERISA, the Affordable Care Act, and HIPAA. On 402 of ERISA states that employee welfare benefit plans must have a written plan document.  By consolidating all of the required information into one document, employers can ensure that they are meeting all of their obligations under these regulations.

Having a wrap document can also save time and money by allowing an employer to consolidate multiple annual reports and by avoiding the need to update or amend multiple plans.

In addition to compliance benefits, wrap documents also provide employees with a clear understanding of their benefit plans. Rather than having to read through multiple documents to understand the various benefits offered, employees can refer to the wrap document for a comprehensive summary.

Unfamiliar with wrap documents? To ensure that your organization’s wrap document is compliant with ERISA regulations, it’s recommended that you seek the assistance of a qualified professional.  

That’s where Cobra Allie’s can help! Our team of experts is well-versed in the intricacies of ERISA compliance and can help you create a compliant wrap document that meets all the necessary requirements. 

As always, I am happy to answer any questions you may have on this topic. Let’s stay compliant and keep our employees informed!

First and foremost, if an employer maintains several group health plans, they should consider sending one initial notice and one election notice that covers all the plans.  But each notice must clearly identify the group health plan to which it applies as well as any differences in the way COBRA is applied (ex. special limited COBRA for applicable health FSAs).   

For employers that offer health FSA carryovers, COBRA notices should inform participants that carryovers are not counted for purposes of determining COBRA premiums as the premium will be based on the sum of the employee’s salary reduction election for the year and any nonelective employer contribution.  Additional clarification is required to inform the beneficiary whether carryover amounts will be available until exhausted or until the COBRA period ends.

Employers have the option of taking advantage of the special limited COBRA obligations regarding health FSAs, whereby they will only offer COBRA coverage through the end of the current plan year or potentially through the end of the grace period and only to beneficiaries with underspent accounts.  In this situation, the initial notice and election notice should have additional clarification disclosing the limited duration of the health FSA COBRA coverage as well as the underspent account qualification requirement.

The special limited COBRA obligations also affect the Notice of Termination.  A Notice of Termination must be sent when the plan administrator terminates COBRA coverage before the end of the maximum coverage period which is typically 18 or 36 months.  But when COBRA coverage ends at the end of the plan year or grace period for a Health FSA, no such notice is required as long as the limited duration was explained in the initial and election notices. 

A Notice of Unavailability must be sent when a qualified beneficiary notifies the plan administrator of a qualifying event, but the plan administrator determines COBRA is not available (ex. a beneficiary does not notify the employer of a qualifying event in a timely manner).  Although there is a lack of guidance on the issue from the DOL, this could apply to an FSA group health plan if the beneficiary has overspent their FSA account.

Still unsure? Contact us at www.cobraallies.com for a FREE consultation.

You’ve found an Ally!

NOTICE: This is not legal advice and should be viewed for educational purposes.

In order to retain and attract employees, employers offer benefits.  Employee Assistance Programs (EAPs) can offer an array of benefits covering areas such as financial, legal, parenting, elder care, substance abuse, as well as physical and mental health issues.  

Never before has the issue of employees’ mental health been more universally recognized for its importance and impact on workers’ ability to maintain productivity and enjoy an appropriate work-life balance.  More and more, employers are offering mental health benefits through their EAP. 

COBRA’s continuation of benefits applies to “group health plans”.

Generally, a benefit is “a group health plan” if it satisfies two criteria:

• It provides medical care: and
• It is maintained by the employer, whether the employer contributes to the plan or not.

All EAP’s are not the same and the services that are offered need to be looked at carefully to determine if it will be subject to COBRA. For example, some EAP’s will offer referral-only services based on the employee’s situation and will only provide them a list of counselors.

In DOL Advisory Opinion 91-26A, the DOL concluded that a referral only EAP, staffed by persons who were not trained counselors, did not provide medical benefits and so was not an ERISA welfare benefit plan.

Other EAPs’ are staffed with a trained counselor(s) or psychologist(s) that can provide counseling.

The key to determining if your EAP is subject to COBRA is identifying whether or not your EAP is providing medical care. Under ERISA, a group plan must provide “medical care” within the meaning of IRS Code section 213d. “Medical care” includes the diagnosis, cure, mitigation, treatment or prevention of disease and any other undertaking affecting any structure or function of the body.

An EAP that simply provides a referral service would not be subject to COBRA, while an EAP that provides direct counseling and support by on-staff professionals clearly offers the diagnosis, treatment, and prevention of mental health issues and as such is providing medical care and thus would be subject to COBRA continuation of benefits.

Still unsure? Contact us at www.cobraallies.com for a FREE consultation.

You’ve found an Ally!

NOTICE: This is not legal advice and should be viewed for educational purposes.

COBRA compliance mistakes can be completely unintentional but could cost an employer large fines or lawsuits.  Choosing to administer COBRA on your own is a HIGH RISK, LOW REWARD decision.

Fines for COBRA non-compliance can be costly.

IRS and DOL penalties are applied to EACH instance of a compliance issue, which means they can quickly add up for every incorrect letter or missed deadline.  The IRS has a maximum penalty of $500,000 per year!   

In addition to the above fines, employers with compliance issues open themselves up to lawsuits from former employees and can be held liable for paying for a qualified beneficiaries medical claims.    

Most employers do not have the infrastructure or resources to keep up with and administer all the COBRA requirements such as required notices, election and payment deadlines, late and partial payments, different coverage periods, changes to plans options, address changes and terminations of coverage, as well as Open Enrollment for qualified beneficiaries.

Employers who choose to do their own COBRA often do so manually, with no administrative system to support them which further increases their risk of non-compliance.  Employers that recognize this risk CAN buy their own software but for most small businesses, the cost of best-in-class COBRA administration software costs more than the outsourcing model.   

COBRA law is not immutable.  It has and will change over time.  The additional burden on employers to keep up with these changing regulations normally falls exclusively to a company’s HR team.  Choosing an outsourcing partner to administer your COBRA will free up your internal resources to focus on the needs of YOUR business.

Many qualifying events such as reduction in hours, being laid off, or separation of an employment, whether voluntary or not, can lead to emotional, difficult situations. Third party administrators ensure fairness and compliance by strictly enforcing rules and regulations while supporting the participant throughout the process which helps avoid conflict and protects the employer.

Outsourcing your COBRA Administration and partnering with COBRA Allies is a LOW RISK, HIGH REWARD decision and you can rest easy that your compliance to the regulations is being handled by experts. We are in this business to help you focus on what YOU do best, while we do the same.  Ultimately, this decision will lower the burden on your HR team and reduce your costs.

You have found an Ally!

COBRA Allies, a leading provider of COBRA Administration, Premium Billing, and Compliance support, has partnered with Human Interest, a 401(k) provider for small- and medium-sized businesses, to add an affordable retirement service to your benefit offering. 

COBRA Allies believes in partnership and carefully chooses who we partner with.  We believe strongly in supporting small businesses do what they do best while we remove the burdens of COBRA Administration.  Our partners must bring value to our clients and must share our values.  Human Interest does both and we are proud to partner with them.

Human Interest eliminates the burden of managing a 401(k) plan with easy setup and administration, recordkeeping, and streamlined onboarding for employees. A top rated 401(k) provider on Google, Human Interests works with over 7,000+ businesses and has a 70% participation rate (2x the industry average).

We’re committed to our customers, that’s why COBRA Allies is excited to partner with Human Interest in making affordable retirement plans accessible to people in all lines of work.

Interested in learning more? Contact COBRA Alliesat service@cobraallies.comor PartnerSales@humaninterest.com or visit humaninterest.com.

https://humaninterest.com/disclosure/

Don’t forget about your COBRA QUALIFIED BENEFICIARIES.

Open Enrollment is a busy time for HR teams throughout the country, as well as the brokers and administrators that support them.  It can seem like a whirlwind of managing change, communicating with employees, and answering the inevitable laundry-list of questions.  One requirement that can be overlooked is the need to include all COBRA qualified beneficiaries in the process.

“…a qualified beneficiary receiving continuation coverage must receive the same benefits, choices, and services that a similarly situated participant or beneficiary is currently receiving under the plan, such as the right during an open enrollment season to choose among available coverage options.”

-DOL Booklet, “An Employers Guide to Group Health Continuation Coverage Under COBRA”

The term “Open Enrollment” is defined in the regulations [Treas. Reg. §54.4980B-5, Q/A-4(c)] as “a period during which an employee covered under a plan can choose to be covered under another group health plan or under another benefit package within the same plan or to add or eliminate coverage of family members.”

Very simply stated, if an open enrollment period is available to active employees, it must also include COBRA qualified beneficiaries (QBs).  All the options available to a “similarly situation participant” such as, changing benefit options within the plan, adding coverage for dependents, and switching plans must also be available to COBRA QBs.  This applies even if the Open Enrollment period and qualified beneficiaries election period overlap. 

Keep these things in mind…

• The need to include qualified beneficiaries means that all materials provided to active employees must also be provided to COBRA QBs. 
• If a QB changes their coverage at open enrollment, the plan has the right to change the premium.
• Dependents of a COBRA QB added at open enrollment are NOT qualified beneficiaries if they were not enrolled in the plan prior the qualifying event, and as such will lose coverage as soon as the QB does.
• When an employer requires active employees to re-enroll as Open Enrollment, the same requirement applies to COBRA qualified beneficiaries.  Not re-enrolling per the employer’s requirement will result in a loss of coverage. 

Keep it straightforward and simple…  ensure you include your COBRA qualified beneficiaries in the Open Enrollment period in the exact way you do your active population or partner with an administrator that takes care of it for you the way COBRA Allies does.

Please contact your Service Ally today at service@cobraallies.com or 1-888-209-5074 if you have any questions or concerns regarding Open Enrollment COBRA compliance.  We look forward to hearing from you!

What is your implementation process like?

I can only assume this question comes up so often as everyone has experienced a rough kick-off with a new service provider. 

I can distinctly remember bringing on a new software platform and being told we would receive extensive training, which turned out to be a half-hour webinar.  When we requested additional training, we received an invoice for $1000.  I still remember that frustrating experience after almost a decade and we actually moved away from that provider the first chance we got.

The implementation process can directly impact the partnership and working relationship between two companies for years, either positively or negatively. 

Our goal at COBRA Allies is always to make a positive impression.

For us, implementation is more than just an exchange of data in order to set-up services as quickly, efficiently, and accurately as possible, although this is always one of the main goals. 

Our implementation process was designed with a few additional goals in mind:

• Building our relationship.  This is a partnership, and we want to earn your trust.  We want to be flexible for your needs. 

• Keeping the client informed and educated.  The process timeline shouldn’t be a surprise and the milestones should be clearly defined and understood.  COBRA administration or Premium Billing are very structured processes and helping the client to understand their responsibilities and flow of information is key.

• Efficiency and ease of use.  The process is structured and tracked with simple checklists that keep everyone involved on the same page.  The process is as paperless as you would like.  And the process is fast, as the system setup can be completed within one week. 

These goals extend beyond the implementation and onboarding journey and become a part of our relationship management with your dedicated Account Manager.  Throughout our partnership we will welcome feedback and do everything in our power to remain your administrator of choice. 

Please contact your Sales Ally today at service@cobraallies.com or 1-888-209-5074 if you would like to receive a proposal for services.  Or visit our website at www.cobraallies.com and select Request Proposal under Contact Us.  We look forward to hearing from you!

The last few years have seen many class action lawsuits surrounding COBRA Election Notices.  Penalties and fines for various notification inadequacies can be STEEP, including $110 per day of noncompliance, as well as possible liability for medical and legal expenses reimbursement.  Many employers have settled these types of lawsuits rather than litigate.   Now is a great time for employers and administrators to evaluate the federal and state regulated requirements (these aren’t “guidelines” or suggestions folks) regarding the election notice process, content, and timelines. 

One Notice that often flies under the radar and is missed entirely by employers is the “General” or “Initial” Notice (both terms are used).  The intent of the Initial Notice is to provide basic information regarding COBRA and the rights and responsibilities of qualified beneficiaries to ensure they have the information they need before the occurrence of a qualifying event.  The Initial Notice requires that each covered employee as well as their spouse (if covered) be notified within 90-days of their coverage election.  One exception to the 90-day requirement is if the administrator is required to furnish an Election Notice to the employee or covered spouse within that same timeframe, thus precluding the need for an Initial Notice.

A key component of the Initial Notice is delivery of the notice to the participant and the covered spouse.  It is worth noting that there is no requirement to notify qualified dependents.  If mailing, one notice may be sent if the plan administrator’s latest information is that both the participant and covered spouse share a residence.  If the participant and covered spouse do not share a residence, individual notices must be sent.  Many employers provide the Initial Notice by hand to the employee, which seems efficient and straightforward, but hand delivery to the employee at work does NOT satisfy the requirement of notifying the covered spouse.  Cobra Allies recommends that mailed notices always be sent in addition to any hand-delivered version.

Please contact your Service Ally today at service@cobraallies.com or 1-888-209-5074 if you have any questions or concerns regarding Cobra Notices.  We look forward to hearing from you!