It’s the most wonderful time of the year! With chilly mornings, fallen leaves (and in some places, snow), supermarkets filled with signs of Thanksgiving feasts, and holiday decorum, we can all feel the holiday season is upon us.
In the workplace, the holiday season often brings a busy influx in workload or changes within a business that can cause disruption to your everyday workflow and task management.
These kinds of changes often lead to holiday oversights involving HR departments, insurance agents, and employees so let’s take a look at a couple examples and how you can avoid them.
My employee was going through a divorce around Thanksgiving, and unfortunately, she forgot to notify the Plan of the divorce within 60 days as our plan terms require. We informed her of this fact, but then learned that she was never made aware of her requirement to report the divorce to us in time. Are we on the hook for her ex-spouse’s benefits?
Answer: Maybe. While the employer in the aforementioned scenario may need to provide some sort of “self-insured” coverage for the former spouse, the ramifications of not furnishing the employee and her spouse a General COBRA Rights Notice (aka Initial Rights Notice) can be far worse than just paying claims out of the employer’s pocket. Not only can the IRS penalize this employer with hefty (per diem) fines, but the employee/former spouse may sue the employer for the coverage rights that the former spouse was not ever made aware of. This can lead to a costly (and time-consuming) lawsuit, expensive claims, and a whole lot of headache for the Company, and all parties involved.
A Christmas Conundrum:
With our group health renewal happening December 1st -- right around the holidays, we completely forgot to inform our COBRA qualified beneficiaries that the new plan the company has selected for the new plan year is a bundled plan which now includes medical, dental and vision. One plan cannot be elected without the other but we failed to inform the COBRA eligible persons. Now they’ve been paying the wrong premium amounts, and some don’t have the correct enrollment with the carrier(s). What happens now?
Answer: Without proper open enrollment notification, the employer is out of compliance but the issue is more complex than that. The qualified beneficiaries involved in this sort of scenario must be informed of the plan changes, rate changes, and ultimately their coverage must be corrected, even if that costs the employer several thousands in premiums. If the carrier(s) won’t allow a retroactive correction, the employer may be on the hook for “self-insuring” the COBRA beneficiaries for “x” number of months to bridge the gap between when coverage was elected and when coverage changes occurred. Further, this kind of oversight could lead to a lawsuit as employees may feel that their COBRA rights were violated or that their claims were rejected due to an oversight like the one described.
How to Avoid Holiday Horrors Like These?
Human Resource professionals and insurance agents are encouraged to organize the COBRA compliance related tasks ahead of time before the holiday season hits and discuss what tasks need to be managed as well as determine who will be responsible for what. Further, Employers are encouraged to consider outsourcing COBRA compliance duties to a professional third-party who helps keep things on track and keeps employers out of a courtroom. Top tier COBRA administration and organized, strategic planning can help HR departments stay on track and can aid insurance brokers in managing certain tasks on behalf of their clients so that things don’t slip through the cracks. Also consider a post-holiday audit similar to the ones CobraHelp conducts for our clients, ensuring that nothing was missed.
Any third-party administrator should check the work they perform to ensure accuracy and timeliness so ask your vendors if this is something they provide as part of the standard services.
If you have questions about COBRA and benefits compliance, please don’t hesitate to contact us at CobraHelp. We’re here for you this holiday season and always.
Happy Holidays from our team to yours!