The pandemic has seen the ushering in of alternative work environments, like working remotely, as well as an immense amount of resignations. The nation is in flux due to the subsequent employee staff shortages.
If you are a business owner in this tumultuous environment, you know all too well how the working world has changed throughout the past year and the onslaught of COVID-19. Thankfully, even with this uncertainty that is clouding many parts of day-to-day business life, you can discover how to best manage your COBRA administration during this hectic time. This will help you as you navigate the on-board and off-board processes for your employees. Read on to learn more:
What is COBRA Coverage?
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that gives employees the option of continuing their employer-provided health insurance in the event they are fired, laid off, resign, or another qualifying event occurs. Although they could buy a policy in the free market, in most cases, these employer-provided plans are much cheaper even when the employee has to switch to paying the full premium and a small administrative fee.
Four Basic Steps of COBRA Administration
The following are the four basic steps of COBRA administration:
Notify all eligible group health care participants about their COBRA rights.
After a qualifying event, provide timely notice of COBRA eligibility, as well as information regarding the duration of coverage, terms of payment, and enrollment forms.
Provide a timely notice when COBRA coverage expires.
It’s also imperative to respond to individuals seeking coverage who are not eligible for COBRA.
Is COBRA Applicable?
In nearly all cases, businesses employing at least 20 full-time equivalent employees must comply with COBRA guidelines. If you have fewer than 20 full-time equivalent employees, you will instead have to adhere to similar state laws. In general, at the time of the qualifying event, if an employee is covered by their employer’s insurance plan, they will continue to be eligible through COBRA.
What Type of Employment Changes Qualify For COBRA Coverage?
There are several types of qualifying events that would make an employee eligible for COBRA coverage. They are as follows:
An employee’s job is terminated by the employer for reasons other than the gross misconduct of said employee.
An employee resigns or quits voluntarily.
An employees' hours are reduced below the point of qualifying for benefits under the employer’s plan.
The death of a covered employee.
The legal separation or divorce from a covered employee (in which case, the previously covered spouse would become eligible).
A child who was once dependent ceasing to be dependent under the plan.
An employee becomes qualified for Medicare.
Managing COBRA Policies During an Influx of Resignations
Admittedly, now is not exactly the easiest time for managing recruitment, on-boarding, or off-boarding. There are many details within these administrative tasks that simply pile up. Unfortunately, these tasks are required to meet the compliance requirements for your business. Managing COBRA administration is one of these tasks, and with mass resignations for so many companies nationwide, you want to make sure you have the right processes in place and the right guidance to enforce them if needed.
Standard procedure is that when a qualifying event occurs (such as an employee either quitting or being terminated), the employer must notify the COBRA administrator within 30 days of when the event occurs. The administrator must then provide an election notice to the employee, dependants, or both within 14 days of receiving the notice. This will notify them of the eligibility to enroll in COBRA coverage, as well as other details. However, employers that are also plan administrators, and do not outsource COBRA administration, have 44 days to provide the election notice to the employee and any eligible dependents. This being said, election notices should be provided as soon as administratively possible.
Do You Need a COBRA Administrator?
Some companies opt for an internal, designated COBRA administrator who specifically manages all COBRA procedures. That being stated, COBRA administration can cast a heavy administrative burden for many businesses. Instead, we recommend you outsource this task to a third-party COBRA administrator for the most cost-effective way to handle the task. Interestingly enough, many employers find that the cost of a third-party administrator is less costly than the internal expense that would be incurred if processed by a company’s internal HR representative.
Bottom Line: Don’t Go it Alone
COBRA administration during mass resignations can be a lot to handle, but with the right processes and guidance in place, administering them can go smoothly. Contact TPC today to see how our team can help assist in this process!