COBRA Administration: Why You Need Benefits Connection

COBRA Administration

Why You Need Benefits Connection

In your business, whether you are a small business owner or the Human Resources Manager of a huge corporation, you know how difficult it is to stay current with all the ever-changing health care rules and regulations. For many of you, staying up to date on all the changes in health creates a drain on your resources, both in time spent maintaining the necessary knowledge and understanding the systems, and in profits when and if mistakes are made and your company is fined for noncompliance.

Your problem is even more difficult when managing with the complex web of the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA. The program was designed to provide a way for your employees and their families to maintain their group health benefits after their job loss, divorce, or other loss of dependent status, known as a “Qualifying Event”.

Too many companies underestimate what is involved with COBRA administration. The complex program has a large number of requirements, such as notices, account tracking for varying time frames, and more, depending on the type of qualifying event. It is not something that most companies can, or should handle on their own.

So, what makes COBRA Administration so complex? How should I handle this for my company?

What is COBRA?

COBRA gives workers and their families who have lost their health benefits the right to choose to continue their group health benefits which had been provided by their group health plan, for limited periods of time. The circumstances for their loss of health benefits may be voluntary or involuntary job loss, reduction in the hours they are working, transition between jobs, death, divorce, or other life events.

Why does my company need an outsourced COBRA administrator?

COBRA is complex to administer. You must be aware of deadlines and details that can make it difficult to be compliant with COBRA regulations. Because mistakes can be costly, in terms of fines or in lost time, it makes sense to outsource the task to an expert. That usually means you will need a third-party administrator for your benefit programs.

Benefits Connection’s COBRA administrators are experts in staying up to date on the regulations and in keeping their employer clients in compliance.

What does COBRA require from employers?

COBRA requires that employers send notices to employees, former employees and their spouses and children, and to calculate and collect premiums. Employers are required to keep track of employees who are eligible and employees who are not. They also need to have a record of who received notices and when they were sent. And finally, they need to determine whether premiums are accurate and paid on time.

What are my advantages to outsourcing COBRA administration?

In a sense, outsourcing COBRA administration can be considered a form of risk management for the employer. Because of the legal issues that surround proper administration of COBRA, it is essential that every aspect of the process is done correctly. One of the primary reasons employers outsource COBRA administration is in an effort to minimize their exposure to risk.

How can I determine if I need to outsource COBRA administration?

To determine whether or not outsourcing COBRA administration makes sense for your organization, ask yourself these three questions:

First, does the company have the time to administer COBRA correctly?

Second, is the company knowledgeable about the latest COBRA requirements?

Third, can the company afford the cost for the liability of noncompliance should it get it wrong?

If the answer to any of these questions is ‘no’, then the employer should strongly consider outsourcing COBRA administration to a professional administrator such as Benefits Connection.

What features should I look for in a COBRA administrator?

There are several features employers should expect from their COBRA administrator:

You should expect billing and collection service on a monthly basis.

You may want online credit and debit payment options available to COBRA participants.

You may want flexible remittance options that give an employer the choice of how the premium will be paid to the carrier, the employer or both.

It’s important that COBRA administrators be capable of monitoring and tracking. This would include the 60-day election period, the 45-day initial premium payment period,

the ongoing 30-day grace period and cessation of COBRA coverage.

Expect an administrator to provide user-friendly monthly activity reports that summarize billing and collection from COBRA participants.

Offering an employer a portal to view COBRA participants and activity in real-time, or even to enter information is now offering in COBRA administrators’ menu of services.

What else can I gain by outsourcing COBRA administration?

Because COBRA can be difficult to understand as well as confusing, access to experts who can walk participants through the process is essential. Employers benefit by being able to rely on an experienced COBRA administrator which understands COBRA and can answer COBRA questions from your former employees. Being able to provide 24/7 access to account information online and happily accepting participant calls are two more important factors that employers can expect from any well-rounded COBRA administration service.

And, most importantly, when you outsource with Benefits Connection, you can expect to avoid the excessive work needed for you to stay current on all COBRA regulations, and to avoid the risks associated with doing it yourself and making a mistake!

This entry was posted on Friday, February 8th, 2013 at 6:15 pm and is filed under Benefits Connection Updates, FAQs, News for Brokers & Consultants, News for Employers. You can follow any responses to this entry through the RSS 2.0 feed.

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