COBRA Refresher: 4 Important Notices That You Need to Know About

COBRAAccording to the Consolidated Omnibus Budget and Reconciliation Act (COBRA), employers who offer a group health plan for more than 20 employees must offer temporary continuous coverage to qualifying beneficiaries after qualifying events.

A qualified beneficiary generally is an individual covered by a group health plan on the day before a qualifying event who is either an employee, the employee’s spouse, or an employee’s dependent child.

A qualifying event is a circumstance that would cause the qualified beneficiary to lose their group plan. The type of event determines the length of coverage offered, but continuous plans range between 18 and 36 months. Here are some examples of qualifying events:

  • The death of a covered employee
  • A covered employee’s termination or reduction of hours
  • The covered employee’s new entitlement to Medicare
  • Divorce or legal separation from a covered employee
  • A dependent child ceasing to be a dependent under the plan’s requirements

Employees must be offered health care, dental, vision, medical spending accounts, hearing, prescription, substance abuse, and mental health plans, but only if you offered those services under your group plan.

Generally, the qualified beneficiary pays the entire cost of the continuous coverage plus two percent to account for your administrative costs. Employees who take COBRA coverage for a disability can be charged 150% of their premiums for coverage after month 18.

Per regulations, employers are required to provide certain COBRA notices with specific information and timeframes, depending on the circumstances.  Failure to comply with these regulations can result in fines of $100 to $400 per day per qualifying beneficiary.

4 Notices Required by COBRA

General Notice

This document describes employees’ COBRA rights and the employer’s responsibilities. It must be given to each covered employee and each employee’s spouse within the first 90 days of coverage. It needs to have the following information:

  • Name of plan and contact information of the plan’s COBRA administrator.
  • A description of the coverage provided by the plan.
  • Instructions for beneficiaries to notify the administrator of qualifying events or disabilities.
  • An explanation of the importance of notifying the administrator about address changes.
  • A statement that the notice does not fully describe COBRA or the plan, and that more information is available through the plan’s administrator.

Click here to see a sample General Notice.

Election Notice

This document explains the employee’s rights to continuation coverage and how to elect it. The administrator must send an election notice to each beneficiary who loses their coverage due to a qualifying event within 14 days.

  • Name of plan and contact information of the plan’s COBRA administrator.
  • Identification of the qualifying event and qualified beneficiaries.
  • An explanation of the beneficiaries’ right to elect continuation coverage.
  • The date coverage will terminate if continuation coverage is not elected.
  • The process to officially elect the coverage.
  • Outcomes if coverage is waived or not elected.
  • How coverage might terminate early.
  • Premium information, including amounts, grace periods, and schedules.
  • The type and scope of coverage available and how it can be extended for disability or other qualifying events.
  • An explanation of the importance of notifying the administrator about address changes.
  • A statement that the notice does not fully describe COBRA or the plan, and that more information is available through the plan’s administrator.

Click here to see a sample Election Notice.

Unavailability of Continuation of Coverage Notice

Should an individual request continuous coverage, but the plan administrator determines that the individual is not entitled to coverage, the administrator must send a notice of unavailability. This simple document must be provided within 14 days of the original request and explain the reason for denial.

Click here to see a sample Unavailability of Continuation of Coverage Notice.

Termination of Coverage Notice

If an individual’s coverage is terminated early, the employer must provide a termination notice. This notice must include the following information:

  • The date coverage will terminate.
  • The reason coverage is being terminated.
  • Any rights the qualified beneficiary has under the plan (or the law) to elect alternative coverage, such as the right to convert the plan to a private policy.

There is no timeframe to provide this notice, but regulations say it should be delivered as soon as the decision to terminate coverage is made.

Click here to see a sample Termination of Coverage Notice.

Providing proper COBRA documentation with the right content is an important part of staying compliant with the legislation, but you also need to document the method, timing, and last address of your deliveries. This is for your protection in case you are required to provide evidence that you upheld your obligations.

For more information about disclosure rules (such as the allowed methods for delivery and specific timing requirements), see CFR 2520.104b-1(B). For a detailed breakdown of your obligations and FAQ’s, visit the Department of Labor’s website.

Navigating the rules and requirements of COBRA can be confusing and overwhelming. If you have questions or concerns, Sinclair Risk is here to help – Give us a call!

Shannon Hudspeth
Human Resource Director
shudspeth@srfm.com

Shannon Hudspeth

Is Your Healthcare Plan Covering People It Shouldn’t?

healthcare eligibilityIf you provide an employer healthcare plan, it’s vital to ensure only the correct people are covered. Comprehensive healthcare insurance is one of the most important benefits you provide to employees, so keeping premiums down matters to everyone.

One of the main causes of rising premiums and healthcare costs is when ineligible people continue to be covered on a healthcare plan. For employer-provided health insurance, ineligible people are typically:

  • Former employees who have now left your business.
  • Employees whose status has changed, meaning they are no longer eligible under the plan, or should be on a different plan.
  • Dependents of an employee, where the status of the dependent has changed.

Examples of ineligible people for a healthcare plan

The following situations could all cause people to become ineligible.

  • A dependent child who ages beyond the dependent eligibility requirements in the plan.
  • A former spouse who separated from your employee.
  • An employee who leaves your business.
  • An employee whose status has changed, for example through changing the number of hours worked or moving to a different position, and whose new status requires a different healthcare plan.

Creating a healthcare eligibility audit

You need a process to understand and remove people from your employer-provided healthcare plan. Here’s how to put an “Employee and dependent healthcare eligibility audit” together.

Understand the eligibility requirements of your current employer-provided healthcare plans

Go through any existing employer-provided plans and note down:

  • All employees currently covered by the plan.
  • All dependents currently covered by the plan.
  • Eligibility requirements for employees.
  • Eligibility requirements for employee dependents.
  • Benefits and coverage provided.

You may hold this information internally, or you can get the data from your broker or healthcare insurance provider.

Analyze your existing employee data

Match your existing employee data against the healthcare plan eligibility requirements. Check:

  • Any employee listed as being on the plan is still employed by you.
  • Any dependent listed on the plan is still a dependent on the employee.
  • The type of healthcare plan is appropriate for the status of the employee.
  • All eligibility requirements are being met by any active plan participants.

Find gaps in the data

It’s likely that you will find gaps in the information. You may not have the latest details of dependents or employees. Complete a gap analysis to understand the data you need to ensure only appropriate people are covered by the plan.

Carry out a healthcare eligibility audit to close any gaps

Once you know what data you need, you will need to audit the information with your employees. Approach each employee with the details of their health insurance for them and their dependents and ask if all the information is factual and correct. If it is, get them to sign off on the information.

If the data is incorrect, get it updated and see how it affects healthcare eligibility. Communicate this back to the employee.

Careful communication is key

You will need to communicate carefully throughout this process. Employees may see the eligibility audit as a tool for taking away healthcare coverage. It’s important to manage the message carefully — The audit ensures only appropriate, eligible people are covered. That means less cost-leakage and medical expenses on plans, which keeps premiums down and ensures the right people have the right coverage.

You may want to complete the healthcare eligibility audit every year. This will ensure your records are up to date and reduce the premiums you and your employees need to spend.

Jill Goulet
Risk Management Consultant
jgoulet@srfm.com

healthcare eligibility

States Refuse to Set Up Healthcare Exchanges

States Refuse to Set Up Healthcare ExchangesStates Refuse to Set Up Healthcare Exchanges

The Obama administration announced last week that more than half of the states refused to set up their own health insurance exchanges.

Last Friday was the deadline for states to notify the federal government of their plans, according to U.S. News. Administration officials had been hoping the re-election would overcome resistance to the new healthcare laws. According to the New York Times, the count was 18 states who intended to run their own exchanges.

The exchanges will be online supermarkets where people can shop for private health insurance. Individuals will also be able to obtain federal subsidies to help alleviate the costs. Each exchange will operate a website where uninsured residents of the state and small employers can compare various health-plan options offered by insurance companies. The exchanges are designed to be similar to the way consumers shop online for hotel rooms and airplane tickets.

The Congressional Budget Office estimated that some 25 million people will be covered under the new exchanges. By default, the federal government will implement health insurance exchanges in the twenty-five states that refused. An additional seven states will operate in federal-state partnerships.

Regardless of the changes, Sinclair Risk & Financial Management can provide you with insurance and risk management strategies to protect the financial strength of your operation, no matter where you are in the healthcare system. We have the skills to find ways to capitalized on the changing market conditions, strict regulatory environment, and help your healthcare organization get the protection it needs.

Our services include risk surveys and assessment, loss prevention, claims monitoring, intervention, and more. Contact Sinclair Risk & Financial Management today for more information about our Connecticut healthcare insurance programs.

Employee Wellness: A Prescription for Fruits and Veggies

Employee Wellness A Prescription for Fruits and Veggies 241x300 Employee Wellness: A Prescription for Fruits and VeggiesEmployee Wellness: A Prescription for Fruits and Veggies

With bad cholesterol, depression, high blood pressure, and obesity all steadily threatening America’s well-being, some healthcare professionals are trying a new, simpler prescription- eat your fruits and vegetables by starting Employee Wellness Programs.

In a partnership between health care providers and farmers market partners, the Fruit and Vegetable Prescription Program (FVRx) provides daily $1 subsidies to buy produce at local farmers markets. Each family member gets the $1 prescription, so for example a family of five would get $35 per week to spend on fresh fruits and vegetables.

A primary care physician and nutritionist meet with each participant monthly to discuss and reinforce the importance of healthy eating. The patient’s progress is tracked over the period of the description, monitoring their weight, blood pressure, and Body Mass Index at each visit.

The program is designed specifically to assist overweight children and pregnant women who are at risk of developing preventable diseases. In the 2011 pilot program, FVRx participants reported a 38.1% decreased BMI over a four month intervention period. The program yielded economic benefits for local farmers as well- participating farmers markets saw an average increase in revenue of 8,129, as well as an influx of new and repeat customers.

The FVRx is one component of an increasing trend in health care that take a preventative approach to healthcare. The cost of medical care is rising, and preventable diseases such as type 2 diabetes and obesity rates only place additional burdens on medical costs. Initiatives such as the FVRx, wellness programs and education target lifestyle changes, including improved diet and exercise, that improve an individual’s well-being and can stave off preventable diseases.

The growing importance of employee wellness programs in the workplace reflects this same dynamic. Employers are helping employees work harder at staying healthy and manage chronic diseases more effectively, so that they and the company benefit from lower health costs and reduced absences. Sinclair Risk & Financial Management is at the forefront of this approach, providing employers with a proprietary Wellness Program designed to promote healthy employee lifestyle choices along with a strategy to create and sustain these behaviors. Contact us today for more information about our employee wellness programs.