When it comes to understanding COBRA in 2021, during a pandemic and with the change in administrations, there’s a lot to be aware of. Confidence in this area can be hard to come by. Here are answers to some of the common questions we’ve been hearing in 2021…
Who is required to offer COBRA continuation coverage? Understanding the answer to this question can be very complex. Different states have different rules. Some have many requirements associated with COBRA continuation, and others have very minimal compliance rules. For example, in the state of Minnesota, if you have a group plan, you are required to offer COBRA to your employees. This does not apply everywhere, so it’s essential to understand your state’s mandates. Layered on top of this are federal laws that require employers of 20 or more employees who offer health care benefits to offer COBRA continuation of coverage.
Which events trigger the right to COBRA continuation coverage? Qualifying events, where an employee who had group coverage has lost it, come in many forms. The death of an employee, employment termination, and divorce can all be examples. Also, especially during the pandemic, a reduction in the hours of employment can trigger the right to COBRA coverage. Employers should also note that the pandemic has sparked Outbreak Period government extensions that impact the deadlines for electing COBRA, paying COBRA premiums, and filing claims.
When do we need to send COBRA notifications? Notifications are a crucial requirement when it comes to ensuring COBRA compliance as an employer. This begins when a new employee is onboarded into a group plan, and they receive the initial notification of their COBRA rights. Then, when there is a qualifying event, there are COBRA eligibility and enrollment forms that need to be delivered, as well as information on the duration of coverage and payment terms. As premiums are being collected during a previous employee’s COBRA enrollment, there are notifications that apply. And finally, when COBRA coverage ends, whether this is before or after the expected coverage duration, another series of notifications are sent. Communication is vital for delivering COBRA and ensuring compliance – and it has become more complex as we’ve navigated the pandemic and changing laws and regulations.
How do you stay on top of changes in the law, especially during COVID? Over the past year, through the COVID pandemic, there have been many changes associated with COBRA. The American Rescue Plan Act of 2021, signed into law on March 11, provides a premium subsidy for employees who have lost coverage due to reduced hours or involuntary termination of their employment. Employers must treat eligible individuals with COBRA coverage through the subsidy as having paid their premiums in full. With the ARPA also came significant changes to employer notification requirements. These changes fall in line with recent IRS and U.S. Department of Labor extensions of COBRA election and premium payment deadlines. The pandemic has created a very fluid situation in the labor market, making compliance more challenging and more important for employers.
What risks are associated with non-compliance? Say you don’t offer an employee COBRA continuation, and then they experience a costly medical emergency. If they can prove that you never offered them COBRA, your company can be on the hook for all of their medical bills. You can add to that costly penalties as you will be responsible for making the person whole by paying their claims. The IRS will apply a $100 per day violation or $200 per day for a family. You’ll also have to pay an ERISA penalty of $110 per day per violation. On top of that, you can add in any damages awarded in the court system and attorney fees. You do the math… The financial risks associated with non-compliance can be massive, and they add up quickly.
Flyte – Your COBRA Partner
When it comes to administering COBRA and protecting your interests, one of the best things you can do is partner with an expert. At Flyte, we’ve spent years helping clients navigate COBRA continuation and compliance, and we’re doing the same today amid this pandemic and the ever-changing COBRA requirements. Visit us here to sign up for COBRA Flyte – the application process is easy!
Questions? We’re here to help.
Reach out to us today to learn more and explore how Flyte can help you navigate your COBRA responsibilities. Our team of HR & Benefit Professionals are ready to help. Give us a call today or email us here.