COBRA Facts

IF YOU WOULD LIKE TO AVOID LAWSUITS FROM CURRENT AND FORMER EMPLOYEES AND SPOUSES, IF YOU WOULD LIKE TO AVOID FINES OF UP TO $210 PER DAY PLEASE READ THIS TWO PAGE BRIEFING.

One of the biggest surprises concerning C.O.B.R.A. is that a large number of complaints and law suits come from ex spouses of employees. The worst part of that is that as an employer or hr manager you may never know or guess that an employee is divorced.

The C.E.O. of our agency B. Wayne Gladden LUTCF had this to say about C.O.B.R.A.; prior to 2004 I had never gotten involved with C.O.B.R.A. administration for my clients. I felt it was an employer's responsibility because it is a federal employer liability law. In early 2004 I decided to make it a priority to become thoroughly educated on the subject due to questions I received from my clients. I attended a six hour seminar sponsored by the Atlanta association of health underwriters. The seminars are attended mostly by human resource managers but there are some insurance professionals and company owners present. I keep myself educated on C.O.B.R.A. and HIPAA regulations. HIPAA is also a federal employer liability law.

The person who conducted the seminar is the vice president of a nationwide administrator for C.O.B.R.A, FSA's and other products. As of 2007 she had conducted more than 1200 seminars and is considered a national authority on both C.O.B.R.A. and HIPAA. She also attends meetings with the U.S. Dept. of Labor when they have changes so that her company can implement the law changes as they occur.

After attending my first seminar I learned what my clients faced for non compliance. I decided at that point to provide at no cost full C.O.B.R.A. administration to them. The federal penalties for each day of non compliance can be 210.00. In addition to fines and penalties an employer faces the chance of being sued to pay the medical expenses for employees and dependents that for some reason may not have been provided their rights of continuation.

The first thing our speaker covered is what occurs during an audit by the I.R.S. and the Dept. of Labor. She went into detail about what triggers an audit. Some are random and some are when current or former employees contact the Dept. of Labor. When an auditor comes in they will ask for your payroll records from the last three years. Once they determine you must be in compliance with the law they will ask to see your notices sent out to all of your employees. They will then ask to see the continuation notices sent to all terminated employees. They will ten ask to see your C.O.B.R.A. procedural manual.

Another important subject that was covered is your general C.O.B.R.A. notice which must be provided to every employee that is covered on your group health plan. This notice informs them of their rights and most importantly tells them that in the event they separate or divorce form their spouse and remove them as dependents and they have a new address, they have 60 days to notify the Human Resource Dept of the change in address so that the former dependents will not be denied their C.O.B.R.A. continuation rights. Without the notice the employer would be held responsible for the non compliance.

When an employee enrolls in your plan or if they decline coverage they must also be provided with a special enrollment right notice. This is a HIPAA notice that tells an employee that if they or their spouse are covered under another plan and they loose the coverage they have 30 days to notify your HR dept that they have lost the coverage and must complete an enrollment form and submit it to the carrier within 30 days. Sometimes the letter of credible coverage will come later and that is acceptable but the enrollment must be completed and submitted to your carrier within 30 days to be in compliance.

There are other notices such as women's health and cancer right notices that must be sent to all employees and most carriers have them in the insurance certificates. We send the notice out in PDF on a disk to all of our clients for distribution to their employees.

C.O.B.R.A. has very complicated collection laws that have to be adhered to and continuation notices have time restraints. It is a great benefit to have a firm do that for you as opposed to having to study the laws yourself.

We provide to our clients all of the administrative services outlined above. All of the notices are sent to your employees and qualified dependents using certificate of mailing. You will be given a password and can go to your account online 24/7. All of your activity including all notices and collections are posted. This also includes your procedural manual which is a C.O.B.R.A. requirement.

In addition to sending out required notices to your employees our administrator will collect premiums from your former employees and qualified dependents that elect to continue their coverage and submit it to you for payment.

Our clients are assigned an account rep to contact, as well as your current and former employees when they have questions. Your company is indemnified against any mistakes that are made as long as you make the proper notifications to the administrator 1.When you hire a new employee. 2. When you terminate an employee. 3. When an employee submits an address change for an ex spouse or dependent children.

Should you have questions as to how many employees you must have for C.O.B.R.A. to be implemented please call our office and press extension 201 for B. Wayne Gladden.