COBRA Articles

Account for everyone. It’s easy for COBRA participants to get lost in the shuffle as employers chase active employees and new hires to provide annual enrollment information. To make matters worse, incumbent brokers often overlook the COBRA coordination issue. Remind clients to make a list of their COBRA active participants, their COBRA pending participants, and their active employee census. Use this enrollment participation formula:

Potential Enrollment = Submitted Census + COBRA Actives + COBRA Pendings + COBRA Waives (covered elsewhere)

Proactively notify. Active and pending COBRA participants must be notified of plan changes. They have a right to know about plan changes and the group has an obligation to tell them. This year marks the second enrollment with 26-year-old dependents, so roughly a million dependents are eligible who wouldn’t be otherwise. If one of your plans is going away (e.g., you no longer offer dental coverage), you need to send all pending participants a notice of ineligibility.

Offer coverage appropriately. COBRA participants are usually only entitled to coverage and coverage-levels that they had during the ending plan year. Therefore, best practice is to ONLY offer participants the plans they already had. What if the previous plan is no longer available? You can offer the most similar plan available, but only with the agreement of the carrier. Make sure the COBRA administrator is informed of the change too. If you fail to notify the COBRA administrator, you are apt to under-collect when the new rates take effect.

Diligently document everything. Careful documentation is imperative this year, perhaps more than any other year. That’s because we have so many moving pieces while we’re phasing out ARRA and phasing in PPACA. If a dispute arises three years from now, you’ll need to look back on your records to explain your actions. You’ll need to know exactly what you did, why you did it, and who you notified. With so many transitions in play, it might hard to reconstruct the facts, so diligent documentation is essential.

Resolve mistakes now. Get a copy of the group bill along with the group census, before and after open enrollment. Capture all of the COBRA pending participants and ensure they are on the current bill or have been removed for good reason. If you are not sending them an open enrollment packet, they probably do not belong on the bill. If a COBRA participant is on the group bill and shouldn’t be, take them off and notify the carrier that you expect to receive any premiums you paid in error. An employer has only a short window of opportunity to recover money since most carrier look-back periods are only 30 to 60 days. If someone should be on the bill and was left off by mistake, be prepared to back-pay premiums when you reinstate. Take care of it when it happens because it only gets more complicated as time passes.