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

Shannon Hudspeth

Why Your Healthcare Organization Needs a Hospice Division

Home healthcare nurse helps senior woman use walker.When the end comes, most of us agree that it’s best to go pain-free at home with our families, rather than surrounded by a sterile medical environment and strangers.

The hospice movement began in London, 1967, when physician Dame Cicely Saunders founded St. Christopher’s Hospice. The movement eventually came to the States by way of the Yale School of Nursing, where nurses combined medical, psychological, and spiritual treatments to comfort dying patients. They offered a dignified, painless way for patients to die.

Originally a social movement, hospice has now become a massive, multimillion dollar industry served by nonprofit and for-profit institutions alike. 52% are for-profit, 35% are nonprofit, and 13% are operated by the government.

Hospitals and healthcare organizations are increasingly adding palliative care options like hospice programs to their business models, and yours should too.

1. Since 1982, Medicare has provided hospice benefits to patients who have no more than six months left to live (as certified by two doctors). This reimbursement essentially makes hospice available to everyone. Congress seems content funding this endeavor indefinitely.

2. Hospice programs are especially profitable. These programs lend themselves well to careful business decisions in regards to staffing and the recruitment of patients. A 2005 study in the Journal of Palliative Medicine found hospice programs owned by large for-profit companies generate margins nine times higher than nonprofit hospice programs. Hospice programs are paid by Medicare and insurance providers by day, not per treatment (like most other forms of healthcare).

3. Hospice programs benefit greatly from doctor referrals. Patients and their families rarely shop for a hospice program as they would a primary care physician or specialist. They are overwhelmed and unwilling to make complicated decisions during this time. When a doctor, hospital or nursing home recommends a program, the patients and families usually accept this option immediately, without evaluating the program’s merits. Hospice programs that work closely with doctors in the same healthcare organization can collaborate on the best care practices that suit the patient and the business.

4. Volunteerism is popular in the hospice industry. At any given time, there are more than 400,000 volunteers providing certain levels of care, spending time with patients, and other duties. This is an extremely effective way of trimming costs while providing valuable, rewarding volunteer experiences to the community and bolstering the spirits of ailing patients.

5. This specialized niche of the healthcare industry is growing rapidly. Soon, the aging baby boomer population will be seeking hospice care from their healthcare providers in tremendous numbers. 

Your hospice program doesn’t have to be heartless. Many programs allow patients to continue to receive treatment during hospice care. There have been many instances where hospice care has ceased because a patient has recovered significantly or resolved to continue treatment.

Without a doubt, developing a hospice program for your healthcare organization is a smart and effective way to meet the needs of your patients and achieve your business goals.

Heather Sinclair
Risk Management Consultant

Why Your Healthcare Organization Needs a Hospice Division

Workers’ Compensation Medicare Set Aside Arrangement – What you need to know!

Nate-DanielsThe title of this blog sounds complicated, and I do this stuff for a living!  Because it’s confusing and complicated, I wanted to take a few minutes to put it all in layman’s terms. So here goes…

SCENARIO: Your employee has a workers’ compensation claim. It could be a work related injury, illness or disease. It’s serious. They have been out of work for an extended period of time and medical bills are more than anyone anticipated.  When this claim settles, the percentage of the permanent partial disability and any future medical services related to this work injury, illness or disease will be taken into consideration. The settlement may require that funds be set aside to pay for future medical bills.

If your employee is a Medicare beneficiary, or eligible to enroll in Medicare within 30 days of the settlement date, they can have a Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) into which they can deposit these funds. CMSA is a financial agreement that allocates a portion of the workers’ compensation settlement to pay for future medical expense.

According to here is what the employee can and can’t do with the funds:

  • Money placed in your WCMSA is for paying future medical and/or prescription drug expenses related to your work injury or illness/disease that otherwise would have been covered by Medicare.
  • You can’t use the WCMSA to pay for any other work injury, or any medical items or services that Medicare doesn’t cover (for example, dental services).
  • Medicare won’t pay for any medical expenses related to the injury until after you have used all of your set-aside money appropriately.
  • If you aren’t sure what type of services Medicare covers, call Medicare before you use any of the money that was placed in your WCMSA.
  • Keep records of your workers’ compensation-related medical and prescription drug expenses. These records show what items and services you got and how much money you spent on your work-related injury, illness or disease. You need these records to prove you used your WCMSA money to pay your workers’ compensation-related medical and/or prescription drug expenses.
  • After you use all of your WCMSA money appropriately, Medicare can start paying for Medicare-covered services related to your work-related injury, illness, or disease.

We understand that this is complicated.  If you still need help with the process, give our team at Sinclair Risk & Financial Management a call – it’s our job to make sure your company’s bottom line is protected and your employee’s interests are as well.

Nathan Daniel