COBRA Open Enrollment - What it Means

Labor Day has come and passed, the community pool has closed for the year, kids are back in school and the leaves are starting to change as the weather cools down. That’s right folks, summer has officially come to an end. 

With fall upon us you might be looking forward to the holiday season, or consuming pumpkin spiced everything, or watching your favorite football team. ​However, there are some things those of us in the corporate benefits world are probably less enthused about when the temperature starts to drop. Like for instance: COBRA Open Enrollment. I know, I know, I can hear the grumblings coming through the screen at the mere mentioning of it. And while some companies have already gotten over the Open Enrollment hump this year most employers renew their plans towards the end of the calendar year.  That said, if your company is one of the latter, it’s time to start thinking about and planning for the upcoming annual enrollments

Annual open enrollment for people who are no longer at your place of business is still just as relevant as ever.

For Benefits and Human Resource professionals alike, COBRA Open Enrollment is hands down the busiest time of year and sometimes that leads to things being overlooked. Maybe nothing more so then COBRA eligible participants. Which would make sense. It’s hard enough to provide Open Enrollment materials and process elections for active employees; thinking about former employees can be an unheeded afterthought. Nevertheless, it’s important to remember that anyone who is enrolled in COBRA or is still within their 60 days to elect COBRA at the time of the plan renewals, should be treated no different than active employees. They have the same rights to Open Enrollment, which is they should be:

• Sent Open Enrollment Materials with plan summaries and rates
• Given ample time to make an election
• Allowed to add, drop, or change any coverage or plan
• Allowed to add or remove dependents
• Able to select a plan without limits or exclusions from coverage for preexisting conditions

Open Enrollment is typically the only time a COBRA participant can change plans or add coverages they didn’t previously have while on COBRA. Of course, there are exceptions within the COBRA statute, but this article applies to many employer groups having to comply with COBRA standards. Open Enrollment is also the only time that a COBRA participant can add a dependent outside of getting married or having a newborn/adopting a child. Since they only get the opportunity once a year, it’s essential that they are included in the Open Enrollment process. It’s not uncommon for a COBRA participant to request a dependent or coverage to be added and then find out that they can only do that during COBRA Open Enrollment, yet they were never sent Enrollment materials when their previous employer renewed their plans 4 months prior.

​What happens then, see if the carrier would be willing to make the change 4 months in arrears or tell the participant “Whoops, I guess you’ll have to wait another 8 months”? Quite the pickle.  As that example illustrates, forgetting to include COBRA eligible participants in Open Enrollment can lead to an administrative and compliance nightmare down the road. So, let this be a reminder, as your company prepares for Open Enrollment season, please keep in mind that COBRA eligible participants should be viewed in the same consciousness as active employees. Read our open enrollment FAQ below, for more information.

Frequently Asked Questions About Open Enrollment:

Q: I know FSAs are a COBRA eligible benefit, does that mean a COBRA participant can elect the FSA during Open Enrollment?
A: While it is true that if an employee has a positive balance in their FSA at the time of their Qualifying Event they should be offered it on COBRA, however it typically should not be offered or rolled over doing open enrollment. FSAs have a start and end date which is the plan year and all expenses must be incurred during the FSA plan year. Once the FSA plan year ends COBRA participants can no longer participant in the start of a new FSA plan year.

Q: If a participant’s COBRA Effective date is the same date as the plan renewal date, should they too be allowed to participant in Open Enrollment?
A: Yes. In these cases, both a COBRA Election Notice and Open Enrollment materials should be sent to the participant.

Q: If an active employee drops a dependent during open enrollment does the dependent need to be offered COBRA?
A: Almost always no. However, on the ultra-rare occasion the “anticipation of divorce” rule might come into play. Under this rule a plan might need to offer a spouse continuation coverage if their coverage was dropped in anticipation of a divorce. [1]

Q: Can CobraHelp do our COBRA Enrollment for us?
A: Yes, of course! CobraHelp offers a flexible add-on COBRA Open Enrollment service that can be tailored to meet your needs. Just ask your dedicated account manager about our Open Enrollment services.

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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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