COBRA Questions

LindaS

How many of you outsource your COBRA notifications? With my previous employer I was the one responsible for ensuring the paperwork was sent to the participant but with my current employer, the TPA does it. I'm looking at ways to cut some costs and, since we are charged per participant for this service, it would seem like a good way to save some money but am curious at to what others are doing.

Another question pertains to the cost of COBRA. I was talking with the company president yesterday about the new regs. and the cost of the COBRA coverage which I was always under the impression cannot exceed 102% of the cost of the coverage. He informed me that this is not the case and you can charge in excess of that as long as it is what you have charged in the past. The situation we are in is that our premiums have actually dropped in recent years but our COBRA rates have remained the same which are now in excess of the 102%. Does anyone see a problem with this? I want to make sure we are in compliance with the law.

Any help would be appreciated.

Mentel

I do the COBRA internally because I do not trust anyone else to do it right. It your third party admin or insurance carrier don't do it right, you are still on the hook, even if you have a contract with them to do it. Save yourself this money and do it yourself. I spend very little time on this. I send new employees the original notice and upon term send them their legal notice. I keep track of the payments and if they are late, I cut them off. As to the COBRA rate, it cannot be more than 102% of your current rate. If you are self-insured, you can use the maximum rates to calculate this instead of the expected rates. This covers you for the maximum insured rate.

Maggie

ritaanz

I also administer the COBRA plan internally. Putting reminders on the Outlook calendar makes the follow-up very simple.

As to the 102%.....

Electing qualified beneficiaries may be required to pay 102% of the premium. Premiums may be increased once every 12 months if the cost of the plan increases. Premiums may be increased after 18 months to 150% of the plan's total cost of coverage for qualified beneficiaries with disabilities receiving 29 months of coverge.

The IRS regulations also cover when a plan may charge 150% of the premium. If a beneficiary with a disability has a second qualifying event within the original 18 month period, the most he/she can be charged is 102% for any coverage period.

However, if a second qualifying event occurs after the end if the first 18 months, they can be charged 150% for the rest of the COBRA period, i.e. the 19th through the 36th month.

HRQ

I outsource. We have around 130 COBRA eligible employees (includes participating and potentially eligible) and pay around $100 per month for the service. If I did it myself, I would spend more than that much in my time processing paperwork. Plus I am no expert in this area.

We are considering using our payroll company (ADP) for COBRA administration. They say they can provide the service for less than what I currently pay AND with less drain on my time.

Pearce

The answers regarding the maximum you may charge COBRA participants have all been correctly stated. Your president is wrong. I wonder what "new regs" he is quoting from.

I administer COBRA for our self-funded plan. 1,200 active employee participants. Normally have 20-25 COBRA participants in any given month.