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Tools to improve the financial health of your employees.

COBRA Administration

The Consolidated Omnibus Budget Reconciliation Act of 1985 requires that employers with 20 or more employees to offer continuation of group insurance coverage to covered persons who lose health, dental coverage or similar benefits due to a qualifying event as defined in the Act.

Qualifying Events for Employees:

Voluntary or involuntary termination of employment for reasons other than gross misconduct

Reduction in the number of hours of employment

Qualifying Events for Spouses:

Voluntary or involuntary 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's becoming entitled to Medicare

Divorce or legal separation of the covered employee

Death of the covered employee

Qualifying Events for Dependent Children:

Loss of dependent child status under the plan rules

Voluntary or involuntary 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's becoming entitled to Medicare

Divorce or legal separation of the covered employee

Death of the covered employee

There are two primary elements of the administrative process; notification and collection. Employees must be given COBRA notices when they become eligible for medical insurance or any other benefit subject to the rules such as dental coverage and Flexible Spending Accounts. They also receive an offer to continue coverage if such coverage would be otherwise lost due to certain qualifying events. If someone elects to continue coverage under COBRA, the collection process begins. Bills are send for monthly premiums and when reveived, they are forwarded directly or indirectly to the insurance company. Certain circumstances in the collection process may result in additional notices to affected individuals.

The BenefitsWorkshop can relieve you of all or part of these tasks. You choose what services you want and pay only for the services you receive.

When should you outsource COBRA administration?

You should hire a COBRA administrator if:

Your insurance company does not provide these services

You have multiple insurance carriers and you want this process consolidated

You do not want to be dependent on an insurance company for these services

You do not want to take on the administration internally

What if we are a small employer?

Employers with 20 or more employees on more than 50% of its typical business days in the previous calendar year are subject to COBRA. Both full and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

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