COBRA And Your Group Health Insurance Policy:

If your business employs more than twenty people, you will need to be aware of COBRA and what it means for your business. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. In short, this act requires businesses with more than twenty employees to provide continuing health coverage after specific "qualifying events" occur.

These events can range from termination from your company, employees moving on to a new employer or other specific events. If you have not been keeping up with COBRA, it is important to catch up to speed now, particularly with all of the new changes that will affect small business owners.

Here are some useful tips for dealing with COBRA and your group health insurance plan.

Tip #1 - Providing Notice. COBRA requires what is called a "First COBRA Notice" after a qualifying event occurs. This notice must be sent out to your employee and their dependants, if applicable. This notice must inform the employee and their dependants of their rights under the COBRA act and provide a description of the terms contained within the letter.

You are required to send out this first notice within 90 days from the date that your employee's health coverage began. You can select to mail the notice or give it to your employees in person. If you prefer, you can send it certified mail to provide your business with a provable paper trail in the event that any confusion occurs.

In some cases, this first notice letter is now being included in the description of benefits that each employee will receive from the company that is providing your group health insurance policy. However, you will need to make sure that it is included and that it fits the requirements of COBRA.

Tip #2 - Inform Your Employees Of Their Responsibilities. Under COBRA, your employees must provide notice to your group health plan administrator if and when a "qualifying event" occurs.

In addition to informing employees of their responsibilities, it is important that their dependants are aware of their requirements as well. For example, if your employee dies, their dependants will be responsible to provide the notice to the plan administrator.

Tip #3 - The Third Notice. This is a notice that must be provided to your employees by your plan administrator within fourteen days of the report of a "qualifying event." If you happen to be the plan administrator for your company, this responsibility will fall to you.

If you are the plan administrator, you will have a little more time to provide this third notice. Currently, employers that are plan administrators are allowed to send the third notice within 44 days of a qualifying event. In other words, you will have thirty additional days from the fourteen day typical notice period.

It is better to send out the third notice immediately, instead of waiting for the complete 44 days to elapse. It is easy to forget to send it out, particularly if you are busy. If you can process the third notice immediately, you will avoid risking non-compliance by forgetting to do so in the required amount of time.

Tip #4 - Employee Responsibilities for Certain Qualifying Events. In addition to tip #2, your employees will also be responsible for providing notification to you and/or the plan administrator if they become legally separated, divorced, or their children reach the age of 18 and are no longer covered by your group health plan.

This is called the fourth notice and it is frequently overlooked. You will need to educate your employees about their responsibilities for the fourth notice and keep tabs on any events that may occur that will require this notice.

Tip #5 - Keep in touch with your plan administrator. If you are not the plan administrator for your group health plan, it is important to stay in touch with them to learn about any new requirements or regulations. Ignorance is no excuse for non-compliance, under the law. New regulations are passed every year and you will need to stay on top of them to ensure that your company is completely up-to-date.

<< Back