COBRA Coverage: Are You Confident in Compliance?
COBRA coverage is a familiar concept for many employers – under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), employees and their families have the option to continue their group health insurance coverage after a qualifying event that causes them to lose it. But when exactly does an employer have to offer COBRA coverage? And which employers? And for how long? If you don’t know the answer to these questions (and many more), are you confident that you can guarantee your own compliance and avoid potential fines and lawsuits?
COBRA Coverage Basics
If you are running a business and you have 20 or more employees in the previous calendar year, you generally have to offer COBRA coverage. But wait – some states have their own rules for smaller employers, so make sure to check those out too. Only certain plans are subject to COBRA and require an offer to continue coverage, so employers need to be aware of which plans that they offer are covered under COBRA.
So when does COBRA come into play? Employers have to offer continuation coverage when an employee or their family loses their group health coverage due to what’s called a “qualifying event”. That could be things like getting laid off, working fewer hours, getting divorced, losing dependent status, or even the employee passing away. When a qualifying event occurs, employers need to give those who were covered under the plan(s) a notification of their COBRA rights. This usually means sending out notices with the required details, like how to keep their coverage, how long it lasts, and how much the new premiums will cost. The recipients have to decide if they want this COBRA coverage within 60 days of receiving the notice.
COBRA coverage doesn’t last forever. In fact, most qualifying events lead to an 18 month maximum continuation period. However, certain situations can extend that time frame and employers must know when these situations are applicable. Other qualifying events and state-specific requirements can mean COBRA coverage lasts for up to 36 months! As many employers know, it gets complicated quickly.
BASIC has been a trusted COBRA Administrator for years.
If this all sounds too complicated, like it would take up too much time, or if you just don’t want to risk penalties and lawsuits from incorrect administration, BASIC COBRA Administration is the peace-of-mind you are looking for. Employers have trusted BASIC to handle all things COBRA for decades. Our state-of-the-art systems and COBRA experts mean a seamless administration model for a stress-free process.
