The COBRA timeline refers to the precise time and administration parameters required to send the notice, elect, pay for, and track COBRA eligibility. A firm understanding of the COBRA Timeline is essential in ensuring your company is staying within compliance and reducing liability. Even if your company outsources your COBRA administration (I’ve heard CobraHelp is the best), it is still important for the company’s COBRA contact to have ample knowledge of the timeline.

Employers have 30 days from the time of the Qualifying Event to notify the plan administrator, except in the case of divorce, legal separation, or cessation of dependency status in which case the Qualified Beneficiary is required to notify the plan administrator within 60 days (Admin Tip: Although many employers wait for QBs to notify the Plan Administrator, in many cases, employers can significantly reduce this notification period by using their own records to discover these QEs and to notify their Plan Administrators themselves).

The plan administrator then has 14 days to send out the Notice, the Qualified Beneficiary has a 60-day period to elect COBRA coverage, and then they have 45 days to pay retroactive premiums. If the COBRA Notice is sent after the loss of coverage date, then the QB's 60-day election period starts on the day the QE Notice was sent. If the COBRA Notice is sent before the loss of coverage date, the 60-day election period starts on the loss of coverage date. It should be noted that QBs may change their minds during their election periods. That is, a participant could elect COBRA on day 15, change their mind on day 25, then change it again on day 50. If this were to happen, the QB would have a 45-day payment period starting on day 15 which is canceled on day 25, and then another 45-day period starting on day 50.

All that being said, there could be a total of 149 days or 179 days, depending on the QE type, from when the QE happens to when the QB needs to pay the COBRA premiums.

COBRA Regulations & Business Reorganization 

The COBRA regulations categorized business reorganizations into two classes, asset sales and stock sales.  A stock sale is defined as transfer of stock in a corporation that causes the corporation to become a different employer or a member of a different employer. An asset sale is defined as a transfer of substantial assets, such as a plant or division of substantially all the assets of a trade or business. In both transaction types a M&A qualified beneficiary is referred to as any employee, spouse or a dependent child who experiences a qualifying event relating to the sale, or individuals who are already receiving COBRA coverage under the selling group’s health plan at the time of the sale. If there were no COBRA obligations negotiated in the final deal, then as previously mentioned, the regulations will enforce who is liable to offer COBRA, which is as follows:

Ultimately, the COBRA issues and responsibilities associated with a buy-sell transaction can be complex and complicated. Even though the COBRA regulations are designed to ensure that employees can elect COBRA during mergers and acquisitions, the best way to avoid any liability is for there to be pointed and binding COBRA obligations outlined in the final negotiations and contract of the deal.

Have more questions about the basics of Federal COBRA? We have the answers on how COBRA works!

Under the Family Medical Leave Act, employers are not required to pay employees while on leave. However, under the new tax reform there is now a partial tax credit to employers who offer wages during times when an employee is out on FMLA. That being said, employees of companies that are looking for additional tax breaks could potentially benefit from the tax reform by receiving pay when out FMLA. While that would certainly be an added benefit to a lot of Americans, the Trump Tax Reform will eliminate several fringe benefits that many employees have come accustom to. The Tax Cuts and Jobs Act will effectively repeal employee deductions and income exclusions for moving expenses, deductions for business entertainment expenses, deductions for transportation expenses, as well as a number of other miscellaneous itemized deductions. 

The fee is calculated either as a percentage of your household income or per person, whichever is higher. The penalty for not having insurance in 2017 will be either 2.5% of household income or $695 per adult and $347.50 per child under 18, whichever is higher. Despite not having the data to prove it, one would be reasonable to assume that with the individual mandate in place, individuals who lose their employer benefits due to a Qualifying Event would be more likely to elect COBRA in order to avoid the individual mandate fee, if for no other reason. Conversely, with the repeal of that ACA provision, it would seem plausible for companies to see a decrease in the number of COBRA enrollment elections. As to what extent, if any, remains to be seen. Read our blog to learn more on how to calculate ACA Benefits Rates. 

For more information about Open Enrollment, Federal COBRA, the Trump Tax Reform, and Tax Cuts, call us today! 

​The use of severance packages for terminating employees has become common practice for a lot of US employers. They are often used to reward longstanding employees for their years of dedication to the company or more commonly to ease the transition of an involuntary termination. Usually the headliner in a severance package is the bundle of pay the former employer can expect to receive. That being said, an increasing number of employers are using employer paid COBRA as a severance negotiation tactic that adds another element beyond just a lump sum of funds. For any employers, and employees, that are currently participating in employer paid COBRA, or for those who may be in the future, there are a few things to keep in mind. 

​Discriminatory Coverage in Self-Insured Plans – Whereas with fully-insured plans there are currently no tax consequences for employer paid severances but for self-insured plans the value of the COBRA premium(s) can be taxable to the former employee as W-2 compensation. For that reason, it’s important for employers to track their COBRA severance - both in frequency and dollar values of the offers - to ensure that they do not discriminate in favor of higher compensated former employees.

Up-Front Lump Payments for COBRA – The most common form of an employer paid severance is where the employer agrees to simply pay the carriers on the behalf of the former employee, as they do for their active employees. This would be an offering on a tax-free basis as mentioned previously in the introduction. What employees need to be weary of is when the severance is structured to where the employer offers the former employee an up-front lump of funds designated specifically to be used for COBRA payments (but doesn’t require proof that that’s what the participant is using it for). In that severance structure, the lump sum will be taxable to the employee as W-2 income.  ​

Electing COBRA Still Mandatory – Perhaps the biggest issue we see with employer paid COBRA is the employer will reinstate or keep the former employee’s coverage active because they offered them a severance, even though the participant hasn’t even elected COBRA yet. Even if the employer has agreed to pay the participant’s premiums for a certain amount of time, coverage should not be reactivated until the participant actually elects COBRA. Find out more information about CobraHelp’s Election Tracking Service.

If Employer Pays Carrier Directly – If an employer agrees to pay a former employees COBRA by paying the carrier directly and those payments are late or aren’t made and the COBRA is terminated, the former employee could file for a breach of contract.
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Partial Severances – It’s not uncommon for an employer to offer to pay the “Employer Portion” of the COBRA premiums and the participant would be responsible for the “Employee Portion” that used to come out of their paycheck. One issue that can arise from this severance structure is if neither party communicates who will be responsible for the 2% administration fee, one side could receive a bill for a different amount then what they were expecting.

The bottom line is that employer paid COBRA is not as black and white as it may appear. That’s why it’s important for the employer and the former employee to both have a detailed understanding of what exactly is being offered and what they should expect should any situation occur. Now of course having a COBRA TPA such as CobraHelp, who has seen it all, can go a long way in helping you navigate those tricky waters!

Have additional questions? Call today to learn more about our Employer services!

Author: Grant Ameel | CobraHelp Client Services Expert and Blogger

No. An employee's Medicare entitlement does not mean that he or she should lose coverage as an active employee.  In fact, employers who cancel active group health plan benefits for Medicare entitled employees may be subject to hefty fines and penalties. The Medicare Secondary Payer statute (MSP) 42 U.S.C. §1395y was enacted in 2003 to ensure that Medicare entitlement and benefits are secondary to employer plans when dealing with non-retirees. The exception to this is that employer groups with less than 20 employees. For small groups under 20 lives, Medicare pays first and the group health plan coverage becomes secondary.  In other words, the employee gets to keep group health benefits even after he enrolls into Medicare. 
MSP also includes a provision to ensure that employers cannot discriminate based on Medicare eligibility when it comes to offering coverage. That is, an employer cannot offer less coverage to those who may be entitled to Medicare benefits eligibility, while offering more coverage to other active employees who are not Medicare eligible. 

The only times that an active insured employee would lose group health coverage when he or she takes Medicare, is if that employee voluntarily waives the active group health plan coverage or if the employee experiences a COBRA qualifying event such as a termination of employment in conjunction with the Medicare entitlement. 
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For more information, read CobraHelp’s information about Medicare Compliance. 

Contrary to popular belief, employees who are on Medicare prior to their COBRA qualifying event may be offered COBRA  continuation coverage when a qualifying event occurs such as retirement (voluntary termination of employment).  Under Federal COBRA, an employee is considered a qualified beneficiary when any COBRA qualifying event arises if he or she was enrolled into the group health benefits at the time of the qualifying event, regardless of Medicare benefits eligibility status.  Thus, employees who are 65 (or older) and are group health plan participants at the time that a QE occurs, should be offered COBRA coverage just like anyone else who experiences a "termination of employment" event. In the latter situations, COBRA becomes secondary (or supplemental) insurance to Medicare. 

Frequently, employees enroll in Medicare Part A because it is free, and wait for Part B until retirement. However, when the employee does this many plans will not pay for services when employees have coverage on plans that aren't covered under Medicare B. 

On the other hand, Medicare and COBRA law present us with a confusing flip-side to this scenario. That is, if the employee was enrolled in COBRA coverage before he became eligible for Medicare, then the COBRA participant would need to discontinue COBRA benefits once he becomes entitled (actively enrolled) into Medicare. The qualified beneficiary (or COBRA participant) cannot keep COBRA and take Medicare in the latter scenario. Most commonly, this happens when a COBRA participant turns 65 during his or her COBRA eligibility period of 18 months. 

It depends. COBRA law tells us that a qualifying event by definition is a loss of coverage. The law also tells us that one type of "loss of coverage" (aka COBRA qualifying event) is when the Medicare Entitlement of the employee causes the spouse to lose coverage under the group health plan. 
This type of loss of coverage typically occurs when the Medicare entitlement aligns with the COBRA event, such as retirement (voluntary termination of employment). When this happens, the employee's enrollment into Medicare paired with termination of employment, causes the spouse to lose coverage under the group health plan, and subsequently, the spouse is offered 36 months of COBRA continuation coverage. Now, that does not mean that there aren't other scenarios in which the employee's Medicare entitlement, subsequently entitles the spouse (or other dependents) to continue coverage under COBRA for a total of 36 months. It is always best to review the details of each situation, and make a determination based upon fact and the laws that pertain to COBRA and Medicare.

Here are a couple of examples of how the spouse of an eligible employee could be eligible 36 months of COBRA:

• If the Qualifying Event and Medicare entitlement happen at the same time. (i.e. the retirement date (voluntary termination of employment = QE) occurs the day before the Medicare enrollment (effective 1st of the month). In this case, the loss of coverage on say, 10/31 and employee's enrollment into Medicare effective 11/01 results in the spouse being able to continue benefits for up to 36 months under COBRA.
• For employers who offer retiree benefits, and regular coverage terminates for an active employee, this might be a COBRA qualifying event that results in the beneficiary's dependents receiving 36 months of COBRA continuation.

Here are several examples where the employee's spouse would not get 36 months of COBRA coverage:

• When an employee does not enroll into Medicare at age 65 and then leaves the company at age 67, the covered spouse of the employee would not receive 36 months of COBRA when the QE occurs.
• When the employee turns 65 and waives active group health plan coverage, the covered spouse does not become entitled to 36 months of COBRA because this is a voluntary waiver of employee benefits.​

For more questions about COBRA and Medicare compliance, call us today. 

This recent shift in the employer sponsored healthcare landscape shouldn’t have too much effect on COBRA Administration, except for two aspects. The first is Open Enrollment. As we know, COBRA is simply a continuation of the exact same benefits a participant had prior to their Qualifying Event with their employer. However, one of the only times a COBRA participant can change their plans or add someone to their coverages is during the company’s Open Enrollment. That’s why it’s important for any company that decides to drop domestic partnership benefits to conduct a detailed COBRA Open Enrollment well in advance that clearly highlights the changes of who can and cannot be covered on the group plan. This is vital for both participants planning to add a domestic partner to their COBRA coverage during Open Enrollment and those who already have a domestic partner on their COBRA plan who will no longer be allowed to continue coverage as a dependent.
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The other aspect of the Supreme Court’s ruling that could impact COBRA administration are the COBRA Life Events. Aside from Open Enrollment, the only other times a COBRA participant can add a dependent to their coverage is either the birth of a child or getting married and adding their new spouse. With the Federal legalization of same-sex marriages, companies could see an uptick of marriage and divorce COBRA Life Events. And while the impact of the Court’s decision might be minimal on COBRA administration overall, for those companies that decide to terminate domestic partner benefits during their plan renewals, having an experienced COBRA vendor to assist with the transition could prove to be a significant asset. 

Resources: ​https://www.ifebp.org/bookstore/doma2014/Pages/default.aspx | www.usdol.gov

​First things first, what is intermittent FMLA? The primary function (although not exclusively) of the Family Medical Leave Act is to serve as an unpaid job protection law for those who need to miss work due to a serious medical condition for themselves, or to care for a spouse/child/parent who has a serious medical condition. Normally FMLA leave is designated for a single, continuous time period when an employee misses 3 or more days from work. The employee must get documentation from their or their family member’s medical provider that confirms that they meet the requirements of what FMLA deems a “serious medical condition.” The process for intermittent leave approval is essentially the same, but instead of the participant missing a continuous span of time, intermittent leave allows for an employee to miss work on a discontinuous basis – a day here, a day there – for an ongoing medical condition. 

One common mistake that employers and third-party administrators make is using the same medical certification form for both normal leave and intermittent leave, with no distinct section for intermittent approval. Typically the problem that arises in this scenario is the medical certification form will ask the medical provider to provide a time frame for how long the medical condition of their patient will, or should have, disabled them from work. For an employee requesting intermittent leave though, using a medical form that is void of an “if applicable” intermittent section potentially digresses the leave process to either approved or not approved. It’s when intermittent leave is simply approved outright, without guidelines or structure, that employers see the biggest risk of intermittent leave exploitation.  It should also be mentioned that intermittent leave isn’t just for doctors’ visits, so requesting a doctor’s note for leave absences isn’t a requirement. Thus approving intermittent leave outright essentially entitles the employee to free reign; taking as many absences from work as they wish, citing intermittent leave with little to no legal grounds for recourse. 

That’s why it’s important for the medical certification form designates a section that asks the medical provider to give an educated guess, given the medical condition, on about how much time that employee might need to miss. For example, one to three absences every two months, or 10 absences annually, or whatever the case may be. The intermittent leave can then be approved within the confines of the provider’s recommendation. If the employee does start missing more time then what they were approved for, the employer can then request an updated medical certification validating the increase of absences. 

In addition to simply tracking intermittent absences, employers should also be on the lookout for emerging patterns, such as taking leave before or after weekends; it’s not always the number of days taken that can be considered abuse, but instead the timing in which those days are taken. 

Another misconception that occurs when employers aren’t well versed on FMLA is they make the assumption that a person who approved on intermittent leave can therefore miss 3 or more consecutive days and have those days simply count against their approved intermittent leave. That is not the case. For someone who is on approved intermittent leave, if they miss 3 or more consecutive days, even if it’s for the same medical condition they were approved intermittently for, that would still be considered a separate continuous leave where the full FMLA process must be administered for approval. Another related misconception is absences occurring immediately before and after unscheduled days off and those not being recognized as continuous leaves – but they are. For example, an intermittent approved employee who has the weekends off, if they miss Friday citing intermittent LOA and then they also miss Monday citing the same, while technically they only missed two days of work, that is still considered a continuous leave and a new medical certification is needed for approval.  

​As previously mentioned, intermittent leave was created with good intentions but that doesn’t mean it can’t be taken advantage of, because it can and it frequently is. As discussed, the proper medical certification form is a must. If the returned medical documentation is thoroughly examined and verified, but still seems suspicious, the employer can request or pay for a second opinion. Intermittent leave should never be blindly or open-endedly approved. Once leave is approved, it’s important that managers be properly educated on the terms of the approval and what they need to do to accurately track absences and what to look for in order to curb leave exploitation. There’s plenty of valid needs for intermittent LOA but if it isn’t properly administered it can set a precedent that can lead to a cancerous problem within an organization. If you suspect LOA abuse in your organization, you should consult with your TPA, HR Department, or the Department of Labor to see what can be done to avoid it from continuing and to prevent it from happening again.   

There’s an age old saying in sales that 'the best customer is an educated customer'. When a customer is educated on the product they are spending money on, the more likely they are to be loyal and appreciative towards that product they have invested in and can feel good about the seller- consumer relationship. Employer benefits are hardly different in that regard, and employees seek benefit help solutions in a variety of ways. Sure, with the introduction of the Affordable Care Act, having medical insurance became a mandatory, legally binding, and subject to tax penalties stipulation in the United States, so enrolling in a company’s medical plan might appear less of a choice and more of an obligation. One could argue that the presence of benefit administration software has eased the benefits knowledge gap between employees and employers. Regardless, most employees don’t understand their medical benefits, and there’s still other benefits - short and long-term disability, 401ks, and life insurance for example -  in which citizens are not required to have under the ACA, that employees will elect to waive simply because they don’t understand what it is they are getting in return.

Companies differ in size, culture, diversity, and pay grade. HR departments need to adopt a salesman mentality and not think of their coworkers as just that, but rather as consumers. What’s the best way to reach them with benefit help solutions? What is essential that they know and what isn’t? Considering the demographic, what is the best strategy to communicate with them? With an ever-changing workforce and an ever-changing benefits landscape, it’s imperative to design new, creative, and diverse educational campaigns, because what’s the point of having and paying for something if you don’t know how to use it?  ​

​Self-funded healthcare plans were once considered only an option for large enterprises with the resources and funds to assume the risks and expenses that come with paying the claims of their workforce. That notion is rapidly changing as recent data suggest that large numbers of small and mid-size companies are joining the self-funded trend within the past 5 years. If managed correctly, a self-funded employer could save 10% to 25% of their healthcare costs by eliminating the profit margins imposed on premiums from carriers of fully funded plans. Those potential savings are nothing new though. Neither are the potential risks of self-funded plans – they are a high risk, high reward healthcare strategy.  As much as a company could save on their healthcare benefits over the long term, they could just as easily encounter unexpected, catastrophic claims that could cripple a smaller business. For example, an employee battling an obscure form of cancer for multiple years could rack up millions of dollars in claims and the employer could be stuck footing the bill. 

​Most experts attribute this trend as a recourse to the ACA. The reason being is that the Affordable Care Act requires fully insured plans to meet strict requirements – such as offering these 10 essential benefits. Self-funded plans however are not held to the same requirements and thus employers have more freedom to mold their plans to fit their employees needs while opting out of other benefits that are deemed less pertinent in hopes to reduce costs. In addition to that, the ACA has levied employer cost-share requirements in the form of taxes and fees, often referred to as the health insurance tax. This tax is mostly compensated by the carriers by increasing the premium rates they charge employers. Self-funded plans, however, are not subject to this ACA health insurance tax, nor are they subject to any state insurance regulations and premium taxes. Therefore, even though the risks are still there, self-funded insurance plans can now save money on the carrier’s profit margins, the ACA health insurance taxes, and by being exempt to meet certain essential benefit criteria. Those three cost saving traits have made self-funding plans more enticing to smaller businesses whom may have otherwise thought the savings weren’t worth the risks. 

LET'S BE BUDDIES!

In nearly every industry there’s always been an emphasis on advancing technology to make providing a service or product more efficient and cost effective.  The HR administration industry is no exception – if not a textbook example. For those of us that remember the days when employee personnel files, FMLA cases, COBRA annals, etc. were managed and maintained using physical paper files, we can attest to the rapid growth of HR technology in recent years. The development and implementation of human resource information systems (HRIS) or human resource management systems (HRMS), has and will forever change how company HR departments and third party administrators (TPAs) operate on a fundamental basis. Long gone are the days of large metal filing cabinets full of manila folders organized either alphabetically or chronologically.  As the responsibilities of HR departments have continuously progressed in complexity, HR technology systems have advanced equally to meet the demands of this ever-changing landscape. The recent advancements in HR technology were not only predictable, they were inevitable. After all, HR departments are non-revenue generating sectors – reducing overhead and achieving long term cost reduction tactics are often the top priority for most company executives when it comes to human resources management. However, is it possible that this increased reliance on HR software could potentially lead to, for lack of a better term, a “compliance bubble”?

​In this post we’ll examine the industry’s push towards “Automated COBRA” and the dangerous notions we caution our clients and brokers to be aware of when it comes to streamlining their COBRA.

“Based on our 2016 research, CobraHelp is one of the few COBRA vendors that continues to audit every single IRN and QE request that is issued, whether it be sent from a payroll company via file feed, or submitted via our website. The reason that we do this is that we have found that most file feeds issued by third parties still require data clarification and correction.  By issuing accurate notifications and maintaining current data on file from the get-go, we are reducing risk for all parties involved and expediting the process as a whole. Being that COBRA is so time-sensitive, a streamlined, intuitive, yet safe COBRA process is key and eliminates the dangers that delays can impose upon employers and agencies.” – Heather Underwood, CobraHelp Vice President
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To be clear, by no means are we against the progression of HR Technology; we pride ourselves on staying current with all aspects of the industry - whether it be changes in legislation or technological developments. However, we do not believe that COBRA should be [can be] completely hands-off for plan administrators. While our file feed options and website features do allow for a much more modern approach and come close to full-automation, we will never offer a service that simply issues notices without someone validating the data. In recent years, more than ever, there has been a swell of lawsuits for compliance issues related to COBRA, which can be very costly (for more on that, see our previous post HERE). With that being said, we just can’t justify placing that much trust in a machine—not when it can impact an entire company or negatively impact an individual’s health benefits. 

​Lack of an Audit Process
As nice as it would be to not have to bother with the minutiae details of COBRA, the fact of the matter is that the risk of non-compliance is too great to an employer to have a totally hands-off approach.  One might make the assumption that a fully automated COBRA system will operationally eliminate or reduce the risk of error. We at CobraHelp would strongly caution against making that assumption. It has been our experience that a great deal of the third-party file feeds we receive (mostly generated from a HRIS) still require data clarification and corrections.  If those same files were fed into a fully automated COBRA system where the data wasn’t manually checked, chances are there would have been a number of compliance vulnerabilities. The issue with having a COBRA administration service that has no manual audit process is that by the time a problem is realized, it could be too late.

Take Away
While change is inevitable, and even more so with the exponential advancements in technology, some things should remain true. One such thing in the HR industry should be checks and balances. Even if systems allow for higher automation than ever before, there should at least still be a rigorous audit process to insure continuity and accuracy within those systems. The reason for that is quite simple – there’s just too much of a risk not to. The Human Resource department for any company is unlike any other part of the business: it’s a non-revenue generating sector, and yet, it’s vulnerabilities through litigation and government fines could potentially lead to the demise of the whole establishment. That being said, employers should use caution when considering the idea of having a completely hands-off approach to, not only COBRA, but any HR process. After all, you can’t take “human” out of “human-resources”.