It's All About Timing....

In this post we'll revisit the COBRA timeline that keeps your business on track and in compliance with important notification regulations.

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.

Once COBRA is elected, there cannot be any gap in coverage so premiums must be paid retroactively to the first day after the loss of coverage occurred. However, COBRA’s payment rules allow participants to pay only for those consecutive months that they want COBRA coverage, and then to drop COBRA coverage going forward. For example, if a COBRA participant accrued medical claims in their first month of the election period but none thereafter, they would only need to pay for the first month's retroactive premium and then they can drop COBRA. Thus a knowledgeable COBRA participant, unlike active employees, can look back to see what their expenses actually were before making a decision to pay for coverage.

The Bottom Line...

With the ACA Individual mandate some participants might elect and pay for CORBA regardless to avoid being fined, but essentially COBRA participants are able to see what will cost more, paying their claims out of pocket or electing COBRA and as previously mentioned, a COBRA savvy participant could wait at least 105 days to make that decision (60 to elect, 45 to pay).

In summary, the COBRA timeline was seemingly designed to benefit the participant over the employer, giving plentiful time for one to elect and pay for COBRA. Nonetheless, employers can do their part to shorten the timeline available to QBs. Qualifying Events should be reported as soon as possible when an unexpected event happens and even beforehand when the event is planned in the future, such as retirement. The better employers are at training their HR personnel to aggressively reduce the time allowed for QBs to elect COBRA, the better they will be at reducing potential cost risks and liability issues.

About the Author

Grant Ameel graduated from Michigan State University with a degree in Political Science and a Minor in Economics. He has worked for over eight  years in a Human Resources capacity, specifically specializing in Federal labor laws. Having worked for small to medium sized privately owned companies, to working for some of the world’s largest employers such as Microsoft and Compass Group, Grant is CobraHelp’s resident expert on all things COBRA, FMLA, and employer compliance.

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