Are you COBRA Compliant in the Age of Health Care Reform?
Commonly Asked Questions and Answers to keep you COBRA compliant
Q: With the inception of the Patient Protection and Affordable Care Act, are employers still required to administer COBRA?
A: YES. COBRA was not mentioned in any of the PPACA legislation. Continuation of coverage will probably become a burden for both employers and carriers with the changes from health care reform. As more options become available to individual consumers, employer and carriers will need to make sure they are meeting their requirements for explanation and choice.
Q: When does the 65% COBRA subsidy under the American Recovery and Reinvestment act end?
A: The subsidy provided under the ARRA ended as of August 2011. The last COBRA participants to be eligible would have been terminated from employment prior to May 1, 2012 and have eligibility for 15 months of the subsidy.
Q: How long is an employer required to keep ARRA-subsidized participant records?
A: Employers are required under COBRA to keep records for 6 year. It is recommended that employer keep documentation of the participants COBRA continuation, related 941 tax reports and related documents or transaction history for the required 6 years or longer.
Q: With the inception of PPACA, will employees that are terminated still have to be offered COBRA election?
A: No clear direction as to COBRA election offerings has been provided yet. However, the current law requires that in most states, employers with more than 20 employees are subject to federal COBRA and mini-COBRA is group with less than 20 employees. The guidelines are:
- Those who experience a qualifying event (see dol.gov for details) are entitled to be offered continuation of coverage through the employer.
- They need to be afforded the opportunity to participate for a period of time
- If at the time of the qualifying event the terminated employee is in the middle of a deductible or treatment plan, continuation may be a beneficial option for them
Q: What are the most common employer mistakes when it comes to COBRA?
A: - Failing to give the appropriate notices to plan participants
- Failing to offer enrollment to COBRA eligible, terminated employees
- Providing a greater amount of coverage or allowing the terminated employee to remain covered for too long.
- Failing to properly send election notices to those experiencing a qualified event
- Failing to document that the election notice was sent
- Failing to collect premiums from COBRA participants
- Continuing to pay the premiums for employees who are no longer covered under the plan
Looking for additional help with your company’s COBRA administration? Contact SHN at firstname.lastname@example.org or call us at 216.831.1220.
Content adapted from Health Insurance Underwritter, December 2011. “Taming COBRA” Robert Meyers.