COBRA Administration Training

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COBRA Administration Training

• By Brett Koenig

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Contents

• I. Define COBRA
• II. State Continuation Programs
• III. COBRA A-Z
• IV. Paychex COBRA Administration Service
• V. Paperwork

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What is COBRA?

• The federal Consolidated Omnibus Budget
  Reconciliation Act (COBRA) requires group health
  plan sponsors to provide covered employees and
  their beneficiaries with the opportunity to
  continue health coverage if it is lost due to a
  qualifying event.
• COBRA Administration involves notification of
  covered employees, their spouses, and dependents
  of their rights under COBRA, and the collection
  and payment of participants insurance premiums.

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What is COBRA?

• COBRA generally applies to employers
• With 20 or more employees (both full-time and
  part-time) on 50 percent of the typical business
  days during the previous calendar year.
• Who offer a group health plan.

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Client Data

• About 30 percent of Paychex payroll clients.
• About 20 percent of all clients have 20 or more
  employees.

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COBRA Eligibility State Continuation

• Employee
• Employees Spouse
• Dependent Children

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Who Pays

• COBRA participants pay the entire premium plus a
  2 percent administration fee.
• COBRA insurance is usually less expensive than
  individual health coverage because the premium is
  usually at a group rate.

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State Continuation Laws

• Many other states have their own insurance laws.
  The state laws primarily extend COBRA-level
  benefits to businesses with fewer than 20
  employees.
• This includes Wisconsin Illinois.

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State Continuation Laws

• Illinois- Plans with 2 or more employees qualify
  for 9 months or 2 years depending on the
  qualifying event.
• Wisconsin- Plans with 1 or more employees qualify
  for 18 months.
• Indiana- Employees can purchase Comprehensive
  Health Insurance

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State Continuation
We are able to offer dental vision w/
permission from the carrier, but the employer is
not required to do so.
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COBRA A - Z
QUALIFYING EVENTS
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Coverage Period

• COBRA coverage can continue for up to 18 months.
  Coverage may extend to 36 months for divorce,
  legal separation, loss of dependent status, and
  the death of the covered employee.

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Notifications

• 60 Days - Qualified beneficiaries have 60 days
  from the date of the qualifying event to notify
  the employer of divorce, legal separation, or
  loss of dependent status.
• 30 Days - Employers must notify the plan
  administrator within 30 days of a termination or
  learning of qualifying event.
• 14 Days - The plan administrator had 14 days to
  notify the qualified beneficiaries of their right
  to continue health insurance coverage under
  COBRA.
• 60 Days - Qualified beneficiaries have 60 days
  after receiving notification to decide whether to
  elect COBRA.
• 45 Days - Qualified beneficiaries have 45 days
  after electing coverage to make the first premium
  payment.

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Penalties

• Failure to comply with COBRA may result in
  penalties under the Internal Revenue Code, the
  Employee Retirement Income Security Act, or the
  Public Health Service Act.
• Internal Revenue Service has a staff of auditors
  dedicated to COBRA audits to verify compliance.

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Penalties

• Employers in violation of COBRA may be subject
  to
• An excise tax of up to 100 per beneficiary and
  200 per family for each day of a violation, up
  to a maximum of 255,000.
• An ERISA penalty of 110 per day payable to each
  qualified beneficiary.
• Payment of legal fees, court costs, and medical
  claims incurred by a qualified beneficiary.

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COBRA Service Features Benefits
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COBRA Service

• Confirmation, reinstatement, and termination
  notices are automatically sent to clients
  nightly.
• Clients receive refunds more often than monthly.
• Federal and state compliance measured annually.

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COBRA Administration
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Target Market

• Paychex COBRA Administration will be sold to
• Prospects with 20 or more employees who offer
  health insurance.
• Prospects with fewer than 20 employees in the 41
  states with health insurance continuation laws.
• New payroll clients
• Current Clients with pre-tax or post-tax health
  deductions being referred to HRS for FSA.
• Non-payroll clients
• Any business being referred to the Paychex Agency
  for Health Insurance.

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Other Factors

• Employee Turnover
• No human resources staff
• Has a human resources staff that does not have
  the time to administer COBRA or state
  continuation laws.

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Needs Analysis

• Who in your company is responsible for handling
  COBRA?
• How does your company ensure compliance with
  COBRA?
• How do you know if you are in compliance?
• Walk me through your process of offering COBRA
  when an employee, spouse, or child becomes
  eligible for the program?
• When do you make your employees aware of their
  COBRA rights?
• What if you didnt have to worry about COBRA
  compliance paperwork and notifications?
• Would you see that as a benefit?

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Pricing
COBRA Standalone
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Additional Information

• COBRA Administration may be sold in combination
  with Paychex Flexible Spending Accounts or
  Premium Only Plans.
• COBRA Administration is billed on the HRS
  invoice.
• Commissions for selling COBRA Administration are
  based on the regular PAR revenue credit structure
  and all current accelerators apply.
• All client information must be received by HRS or
  scanned (MMS and Core) by the 20th of each month
  for an effective date of the first of the
  following month.

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Field Support Line

• The COBRA Field Support Line has been created for
  Sales Representatives, DSMs, and any other field
  sales personnel.
• Field personnel may call this line Monday thru
  Friday, from 800 am to 500 pm EST.
• The number is 888-401-5727, option 5, and then
  option 3.

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Wrap Up

• Paychex offers both COBRA and state continuation
  administration, which helps business of all sizes
  comply with state and federal regulations.
• Paychex provides complete administrative
  services, including setup, timely notices to
  participants, and payment processing.
• Paychex provides toll-free support for clients
  and participants. The number is 800-472-0072,
  option 4.