COBRA & Retirement Health Plans - The Common Misconception

Providing Retirees Notice of Their COBRA Rights 
Did you know that retiring from employment is a COBRA Qualifying Event? The most common term used for this event type is “voluntary termination of employment”. 

Employers often ask about the requirement to offer COBRA continuation coverage, to individuals whom are terminating their employment due to retirement. These individuals typically become eligible to enroll in the employer-sponsored retirement health plans, after providing an “x” number of years of service. The misconception that retirement offered health plans act as a substitute for COBRA is very common amongst employers. ​

The Federal COBRA Regulations requires that anyone who experiences a qualifying event resulting in a loss of coverage from the active group plan is to be offered COBRA, even in the instance a substitute or more appealing retirement plan is offered. When there are changes made to the terms and conditions of a retiree’s coverage due to enrollment in a retirement plan, COBRA must be offered to the retiree and their dependents at the time the retirement health plans are offered. It is important to note, each qualified beneficiary has the option to continue coverage under COBRA. If a retiree elects to enroll in the retirement plan, their waiver of COBRA is not final until after the full 60 day COBRA Election period has been exhausted.

Retiree Coverage and Dependents
If a spouse or child of the retiree, while enrolled in the retirement plan, were to experience a dependent event, such as divorce or legal separation, death of the retiree, or a child ceases dependent status, per the plan design, it is the employers’ obligation to offer COBRA to the dependents. COBRA Qualifying Events for dependents allow a maximum continuation period of 36 months.

Employer Penalties  
When a COBRA Qualifying Event occurs, it is the employer’s responsibility to notify CobraHelp within 14 days from the event date. In turn, CobraHelp has 14 days to mail the COBRA Notice to the qualified beneficiaries. When there has been a delay in the COBRA notification process, there is a $100 excise tax penalty per day ($200 if more than one family member has been affected) for each day an employer fails to offer the required COBRA coverage. Often times, civil lawsuits arise from former employees whom were not notified timely of their COBRA rights, employers been required to pay attorney fees in addition to the COBRA penalties.

CobraHelp and Retiree Coverage Billing
The administration of COBRA and Retirement health plans can be a burden on employers and HR teams. CobraHelp offers retiree billing, keeping COBRA and retiree coverage billing separate. The CobraHelp retiree billing service was established to eliminate common stressors and misconceptions that many employers have with COBRA and Retirement Health Plans. In addition to sending your retirees their COBRA Notices, we can manage their COBRA election period, waivers of COBRA, collect monthly retiree premiums, and manage dependent COBRA events as they arise.

Our Commitment to You
As your dedicated Federal COBRA Administrator, we will continue to uphold your compliance with the COBRA Regulations. We will provide extensive knowledge about COBRA law and law updates, timely processing of COBRA events, act as a liaison between COBRA participants, Retirees and your HR team, and offer a knowledgeable, result driven team that is always eager to assist. It is our goal to be your number one COBRA resource.