COBRA Open Enrollment: Employees vs. COBRA Participants

cobra open enrollment

Before talking about COBRA open enrollment, we’ve covered Which Health Plans Are Eligible for COBRA Continuation Coverage. Now that you know which plans qualify, it’s time to get into more details.

Qualified beneficiaries are entitled to continue coverage on plans in which they were enrolled immediately before the qualifying event. Let’s look at two employees who have lost coverage.

  1. When Bill quits, he is only enrolled in the dental plan with orthodontia coverage
  2. When Tammy gets fired, she is enrolled in the single coverage high deductible medical plan

At the time of the qualifying event, Bill is only offered the dental plan with orthodontia coverage, and Tammy is only offered the single coverage high deductible medical plan. Bill cannot add medical or switch to the lower cost dental plan, and Tammy cannot switch to the family coverage PPO medical plan.

However, Bill and Tammy should be treated the same as active employees during open enrollment. If you allow your active employees to make changes to their election, you must also extend that same right to COBRA enrollees. This means that Bill and Tammy should be provided the same benefit options that would have been available to them as active employees. Representatives of the IRS have informally advised that qualified beneficiaries must not only be allowed to switch between plans of the same type, but also between plans of different types if similarly situated active employees can do so.

Looking back at our examples during open enrollment:

  1. Bill could switch to the lower cost dental plan without orthodontia and add medical
  2. Tammy could enroll her daughter in the medical plan and switch to single plus one medical coverage

Forgetting to communicate or not offering the correct coverage to COBRA participants during open enrollment can leave a company at risk of legal action.

COBRA is the most commonly outsourced HR function. Since 1995, BASIC has developed the best practices for COBRA, ensuring consistent and reliable compliance. BASIC offers optional Open Enrollment Mailing Services to our COBRA Administration clients. To ensure compliance with all COBRA regulations, request a proposal for BASIC COBRA Administration today.