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Comprehensive COBRA Services
As your COBRA administrator, we will:
- Process election forms and track COBRA enrollments
- Bill, and collect premiums from, COBRA enrollees
- Disburse premium payments to insurance carriers
- Notify insurance carriers of enrollments and terminations
- Prepare customized monthly reports on your COBRA participation status
- Continually monitor and interpret all COBRA-related legislation, to ensure worry-free compliance
- Provide automatic, daily back-up of our system data and secure storage of all records and documents
- Provide a dedicated COBRA representative to handle all inquiries
To see how our COBRA outsourcing process works, just click here.
Answers to Your Questions about COBRA
Are all employers required to comply with COBRA?
What is a “qualified beneficiary”?
How long does an eligible employee or family member have,
after a qualifying event, to elect continued coverage under COBRA?
What plans are covered under COBRA?
Can COBRA-eligible employees or family members choose coverage
under just one health plan (such as medical), or do they have to elect
continued coverage under all of the plans (medical, dental, and vision)?
If the employee, as well as the employee’s spouse and dependent children,
are eligible to enroll in COBRA, can the spouse or children enroll if the
employee does not elect coverage?
Who pays for COBRA coverage?
How much are COBRA premiums?
When are premium payments due?
As an employer, what are my responsibilities under COBRA?
What are the penalties to an employer for non-compliance with COBRA?
When does a participant's COBRA coverage end?
Are all employers required to comply with COBRA?
Most employers who maintain group health insurance for their employees are subject to the provisions of COBRA. The few exceptions include employers who had fewer than 20 full- or part-time employees in half of the previous calendar year; church-related plans; and federal government plans.
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What is a “qualified beneficiary”?
Under COBRA regulations, a qualified beneficiary is a person covered under the health plan on the day before a qualifying event, and eligible to elect COBRA after the event occurs. This individual may be an employee or the employee’s spouse or dependent child; a child born to, or placed in the home for adoption by, a former employee while covered under COBRA; and, in certain circumstances, a retiree or the retiree’s spouse or dependent child.
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How long does an eligible employee or family member have, after a qualifying event, to elect continued coverage under COBRA?
An eligible employee or family member has 60 days from either the date of the qualifying event notification letter, or the loss of coverage date, whichever is later, to elect COBRA. This period is called the “COBRA election period.”
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What plans are covered under COBRA?
Health plans subject to COBRA, and plans that are not, are shown below:
| Plans covered under COBRA |
Plans not covered under COBRA |
Medical, dental, vision, and prescription
drug plans |
Life, disability, and long-term care insurance plans |
| Drug and alcohol treatment programs |
Wellness programs |
Employee Assistance Plans (EAPs) that
provide medical care (such as counseling
or psychological treatment) |
EAPs that do not provide medical care |
On-site health care, including discount
or free medical services |
Medical savings accounts |
Section 125 spending arrangements
(cafeteria plans) in certain cases |
Workers Compensation |
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Can COBRA-eligible employees or family members choose coverage under just one health plan (such as medical), or do they have to elect continued coverage under all of the plans (medical, dental, and vision)?
If you offer separate health insurance plans, each enrollee may choose to continue any combination of coverages (such as medical and dental, or dental and vision) under COBRA. On the other hand, if you sponsor one plan with multiple health insurance benefits, the enrollee must elect all of the benefits or none.
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If the employee, as well as the employee’s spouse and dependent children, are eligible to enroll in COBRA, can the spouse or children enroll if the employee does not elect coverage?
Yes, each qualified beneficiary can enroll in COBRA independent of the employee’s election decision. So, even if the employee does not elect COBRA, any qualified family member may choose to continue health insurance benefits under the employer’s plan.
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Who pays for COBRA coverage?
The employee or other eligible beneficiary who elects COBRA coverage pays the full premium for health insurance under the employer’s plan.
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How much are COBRA premiums?
For COBRA coverage, the premium amount can be up to 102% of the employer’s monthly cost from the health insurance carrier (that is, the full premium plus an administrative charge). During the 11-month disability extension period, the COBRA premium can be up to 150% of the employer’s monthly cost.
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When are premium payments due?
Once COBRA is elected, the enrollee has a 45-day grace period to pay the initial premium payment. This payment covers the period beginning when the coverage was originally lost, to the end of the current coverage month.
Subsequent monthly premium payments are due on the first day of each month, and must be received within 30 days from the due date.
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As an employer, what are my responsibilities under COBRA?
Your responsibilities involve complex administrative functions. For example, you’re required to send various notifications to employees, spouses, and covered dependents, (for new plan participants, information regarding their COBRA rights; and, within 14 days of a qualifying event, notice of their ability to elect COBRA coverage). Also, you must maintain accurate records to prove that notifications were sent within the specific timeframes. Then, for COBRA enrollees, you have to track election periods and length of coverage, send invoices for premium payments, maintain payment records and correspondence, and notify participants of open enrollment periods and any benefit changes.
These are some, but not all, of the tedious, time-consuming, and risky tasks employers must perform to comply with COBRA – all of which SelectSource can do for you.
To learn more about COBRA regulations and compliance requirements from the Department of Labor, click here.
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What are the penalties to an employer for non-compliance with COBRA?
If you fail to comply with COBRA, the penalties may include:
- IRS excise tax penalty of $100 per day for each violation. This fine can be increased to $200 for each day in which there was more than one qualified beneficiary per family.
- ERISA penalty of $110 per day, payable to each qualified beneficiary for each day the employer was not in compliance.
Also, you can be held liable for payment of legal fees and court costs, and for medical claims incurred by a qualified beneficiary.
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When does a participant’s COBRA coverage end?
COBRA coverage ends when any of the following events occurs:
- The participant reaches the last day of maximum coverage.
- Premiums are not paid on a timely basis.
- The employer no longer maintains any group health plan.
- The employer goes out of business.
- The participant obtains coverage under another employer’s group health plan that does not contain any exclusion or limitation regarding preexisting conditions (eligibility under a spouse’s health plan does not count).
- The participant is entitled to Medicare benefits.
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