OCA’s COBRA and Retiree Billing Administration solution allows you to easily outsource this key HR function, avoid potentially costly mistakes, and ensures your ability to remain compliant.
COBRA/Retiree Billing Administration
The costs of failing to comply with COBRA can be staggering, including multiple, stacking penalties from governmental agencies as well as civil lawsuits from qualified beneficiaries. Different consequences flow from difference compliance failures and, of course, the amount of possible damages awarded in any particular case will depend on the circumstances of the qualified beneficiary (or beneficiaries) in the case. Qualified beneficiaries under nongovernmental plans may sue to recover COBRA coverage under ERISA, and those under govern- mental plans may sue for similar recovery under PHSA. Such suits carry the potential for large damages, which, in the case of an insured plan, might not be covered by the plan’s insurance. In addition to the standard ERISA penalties outlined at left, failure to provide adequate initial and election notices by a non governmental plan can create exposure to “other relief,” including extra-contractual damages. As in all suits under ERISA, the court is also permitted to award attorney’s fees and interests to the prevailing party.
What We Can Do
Send COBRA Notices
Federal COBRA & HRA Requirements
Groups subject to Federal COBRA MUST allow the former employee an opportunity to COBRA the HRA benefit in conjunction with the medical benefit. If you are subject to State Continuation (not COBRA), the HRA is typically not eligible for continuation, as State Continuation commonly is applicable to only fully insured medical plans.
Frequently Asked Questions
Here are some frequently asked questions (FAQs) and their answers regarding COBRA insurance and State Continuation health care coverage.
What is COBRA insurance?
COBRA is a federal law passed in 1985 that permits employees to retain health care coverage under their employer’s group plan for a temporary amount of time after experiencing a qualifying major life event that would result in coverage termination.
Who Is Eligible?
You qualify for COBRA if:
- Your company has at least 20 employees and a group health plan, and you experience a “qualified” life event that causes the loss of your healthcare coverage
- You are the spouse or dependent child of an individual who qualifies for COBRA
- You participate in a local or state government-sponsored group health plan that is eligible for COBRA (check your local/state laws to determine eligibility)
How Does COBRA Work?
Election Period: The employer must provide a minimum of 60 days for you to elect continuation of your healthcare coverage.
Revocation of Waiver: If you opt not to receive COBRA, you can revoke the waiver and continue your coverage at any time within the election period.
Length of Coverage: COBRA coverage can last up to 18 months. You may apply for an additional 18 months (total of 36 months) of coverage under certain circumstances.
Benefits: You are entitled to continue the same coverage you had prior to the qualifying event.
Cost: COBRA cannot cost more than 102% of what other employees pay for the same coverage.
HSA: Health Savings Account funds can be used to pay COBRA premiums.
What is State Continuation?
State Continuation is very similar to COBRA but applies to businesses that employ fewer than 20 employees. State Continuation laws vary from state to state.
What Constitutes a Qualified Life Event?
- Losing your job for any reason except gross misconduct
- A reduction in number of hours worked
- Divorce or legal separation from the covered employee
- The covered employee becomes eligible for Medicare
- The covered employee dies
Loss of COBRA
Your health plan can discontinue coverage before the COBRA term expires for the following reasons:
- Failure to pay premiums in a timely manner
- Employer terminates the group health plan
- A qualified beneficiary of your plan:
- Begins receiving coverage from a different group healthcare plan
- Starts receiving Medicare benefits
- Causes loss of coverage due to inappropriate behavior, such as fraud
Still have questions?
Ready to Make a Change?
We’d love the opportunity to showcase how we can help with your COBRA/Retiree Billing program!