Avoiding Costly COBRA Mistakes
In the world of HR, acronyms pervade. COBRA is just one of the many acronyms that employers need to be familiar with. COBRA stands for Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). This act protects employees who have quit their jobs, lost their jobs, or had their hours reduced, from losing their health insurance which they have secured through their employer. It gives them the opportunity to pay the premiums for their group health insurance in order to maintain it for a certain period of time. The length of time can vary based on what the qualifying event is that is causing them to lose their coverage. This act not only protects employees, but it also protects spouses and dependents from losing coverage as well.
In general, COBRA applies to employers that employ 20 or more individuals on more than 50% of its typical business days in the preceding calendar year. As an employer, this act requires diligence and action in order to remain compliant. These actions include, but are not limited to, sending initial notifications (notice provided to new additions to the health plan of COBRA availability/responsibilities), sending qualifying event notices (notice provided to qualified beneficiaries when they are losing their coverage and are eligible for COBRA), and reinstating/terminating coverage with insurance carriers as needed. These responsibilities can be tough to administer as the Department of Labor (DOL) mandates a certain timeframe for these responsibilities and when they need to be completed. For each day that the employer fails to be in compliance with COBRA, they are charged an excise tax fee of $100 per day per qualified beneficiary. This means that in a short period of time, if the employer is not staying compliant the fees can add up very quickly and can result in a hefty penalty for the employer to pay.
With all of that being said, it may feel overwhelming or scary to even begin to analyze your organization to see if you’re in compliance or not. You may also not be sure where to start or how to go about tackling COBRA compliance. To help, BASIC provides COBRA administration services for employers nationwide. We have COBRA-certified customer service reps that are responsible for answering both employer questions and also answering questions for current COBRA participants and qualified beneficiaries that contact us. Besides this, our services also include; BASIC providing a COBRA procedures summary which advises the employer of their role in the COBRA process, BASIC sending the required COBRA notices in a timely manner, BASIC handling the billing of current COBRA participants and the premium remittance to the employer, BASIC keeping and providing well-documented records of COBRA activity, BASIC taking over existing COBRA participants, and BASIC keeping the employer up-to-date on current regulations regarding COBRA compliance.
To request a proposal on BASIC’s COBRA services, click here!
To register for our upcoming COBRA webinar, click here!
