Continuing Education Course Sponsored by UNICARE Course

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COBRA Now More Important Than Ever

• Continuing Education CourseSponsored by
  UNICARECourse 32142CL010

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Agenda

• What is COBRA?
• Compliance
• Qualified Beneficiary
• Qualifying Events Coverage Periods
• COBRA Extensions - Secondary Events and
  Disability
• Notifications
• Terminating Events
• More Information

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What is COBRA?
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COBRA

• Consolidated Omnibus Budget Reconciliation Act
  of 1985
• To relieve hardships experienced by employees and
  their families due to temporary loss of group
  coverage

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COBRA

• The law amends
• Employee Retirement Income Security Act (ERISA),
• Internal Revenue Code
• United States Public Health Service
• Provides continuation of group health coverage
  that otherwise would be terminated

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COBRA

• Continued access for up to18 months (or 29 months
  if the qualified beneficiary is disabled)
• Continued access for 36 months for certain
  qualifying events
• Death, divorce, legal separation
• Medicare eligibility
• Overage dependent

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Compliance
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TAMRA 1988

• Established criteria for the IRS to use
• when auditing an employers
• COBRA compliance program.

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IRS Enforcement

• Compliant driven audits
• Audits through the mail
• Package audits

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IRS Audit

• COBRA Training
• Written Instructions
• Program Designed and Updated
• Program Monitored

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• Reasonable Cause
• TAMRA criteria incorporated AND violation
  corrected within 30 days
• IRS can waive penalty

• Willful Neglect
• TAMRA criteria not incorporated OR violation not
  corrected within 30 days
• IRS has no authority to waive penalty

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Employers Compliance Program

• Proper Notification Procedures
• Proper Notification Language
• Adherence to COBRA Time Frames
• Consistency in Applying Provisions
• Calculation of Premium Rates
• Following COBRA Terminating Events

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COBRA Applies to

• Employees
• Spouses
• Dependents

• Former Employees
• Spouses
• Dependents

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• All employers who had 20 or more employees on a
  typical business day during at least 50 of the
  preceding calendar year must comply with COBRA.

Exceptions Federal Government Church Plans
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Employee Count Equals

• Full Time
• Partial Employee
• Owners (Optional)
• Officers (Optional)
• Employee Count

This applies regardless of their eligibility for
the group health plan.
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Qualified Beneficiary
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A Qualified Beneficiary is

• Any individual who, on the date of the
• qualifying event, is an enrollee in a group
• benefit plan offered by a health care service
  plan.

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COBRA Qualified Beneficiaries
Qualified Employee
Covered Spouse
Covered Dependent
Covered Dependent
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Qualified Beneficiary

• Each Qualified Beneficiary can make
• their own plan decisions.

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Qualifying EventsCoverage Periods
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Election Period

• 60 days from the time of the notification
• COBRA is retroactive if elected and paid for
• A waiver of coverage is revocable if within the
  election period

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Loss of Coverage

• An event plus loss of coverage equals a
  qualifying event
• Loss of coverage alone does not equal a
  qualifying event

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18 Month Qualifying Events

• Voluntary termination
• Involuntary termination except for gross
  misconduct
• Reduction of hours, whether full-time to
  part-time
• The only time an employee can be a qualified
  beneficiary is in connection with one of these
  events

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36 Month Qualifying Events

• Death of the Employee
• Employees Medicare Entitlement
• Dependent Child Ceasing to be a Dependent
• The dependent is the ONLY Qualified Beneficiary
  for this event
• Divorce or Legal Separation
• The spouse and dependents are the ONLY Qualified
  Beneficiaries for these events

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Employer Must Know About

• Voluntary Termination
• Involuntary Termination
• Reduction of Hours
• Death of the Employee
• Medicare Entitlement
• Employers Bankruptcy
• Disability (as defined by SSA)

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Employee/Qualified Beneficiary Must Inform
Employer of
Change of Address
Divorce/Legal Separation
Dependent Child Ceasing to be a Dependent
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COBRA ExtensionsSecondary EventsDisability
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Standard Secondary Event

• A standard secondary event is a termination or
• reduction of hours being followed by
• Death of the employee
• Medicare entitlement
• Divorce or legal separation
• Dependent child ceasing to be a dependent

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COBRA Special Medicare Entitlement Stacked Event

• If a Medicare entitlement and enrollment
• occurs and is followed by a termination or
• reduction of hours, qualified beneficiaries
• (other than the employee) are entitled to 36
• months of COBRA coverage from the date of
• the Medicare entitlement.

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Sample of Disability Extension

• COBRA may be extended from 18 months to
• 29 months if any qualified beneficiary is
• deemed disabled (as defined by the Social
• Security Administration) at the time of a
• termination or reduction in hours (or within
• 60 days of the qualifying event) .

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Sample of Disability Reporting

• A qualified beneficiary must provide the
• Notice of Disability from the Social Security
• Administration to the employer or plan
• administrator BEFORE the expiration of the
• 18 month COBRA period and within 60 days
• of the date of the Notice of Award.

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Notifications
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Notifications

• The qualifying events contained in the law create
  rights and obligations for employers, plan
  administrators and qualified beneficiaries.
• Employers must notify plan administrators within
  30 days of an employees death, termination,
  reduced hours of employment, entitlement to
  Medicare, or bankruptcy.

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Notifications

• A notice must be provided within 60 days of a
  disability determination and prior to expiration
  of the 18-month period of COBRA coverage.
• Beneficiaries must also notify the plan
  administrator within 30 days of a final
  determination that they are no longer disabled

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Special Exceptions

• There are 2 special exceptions to the notice
• requirements for multi-employer plans. They are
• The time frame for providing notices may be
  extended beyond 14- and 30- day requirements if
  allowed by plan rules.
• If employee reduces or terminates work hours.
• Plan administrators are responsible for
  determining whether these qualifying events have
  occurred.

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Open Enrollment

• When an anniversary change period
• occurs, COBRA continues must be notified of
• the open enrollment period, the options
• available during the open enrollment period,
• and the monthly premium rates for those options.

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Open Enrollment

• The group must notify COBRA recipients and
  beneficiaries of any plan changes within 30 days.

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COBRATerminating Events
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COBRA Ends When...

• Date of Medicare entitlement
• Cancellation of ALL group plans
• 1st of month after being deemed no longer
  disabled
• Failure to make timely payment
• When enrolled by another group plan without
  pre-existing condition limitations or exclusions
  applying to the beneficiary

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COBRA Enforcement

• Failure to comply with COBRA law can result in
• Levied excise taxes
• Lawsuits against the employer by the Department
  of Labor or by qualified beneficiaries
• A judge in a lawsuit can impose all of the
  following
• Levied ERISA fines
• Claims to be paid by employer, AND
• Damage awards against the employer

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Questions?
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Thank you for Attending!