COBRA Help Needed

Leslie

I only know the basics about COBRA because that's all I needed to know until now.

If a company changes insurance carriers do the COBRA former employees go to the new carrier or stay with the present carrier?

If a company stays with the same carrier but adds to the plan so the premiums increase do the COBRA folks have the option to stay with the less expensive plan?

Is there a time requirement to notify COBRA folks of a plan increase? I know we go with a minimum 30 days, but didn't know if that's law or just public relations. If it is law, what happens to the company if they don't comply?

Any input would be appreciated!

irenesmsaclaims

If a company changes carriers, the COBRA people go to the new carrier. The old plan is terminated and "no Plan, no COBRA".

If the company stays with the same carrier but adds to the plan and premiums increase, the COBRA people have to have the same plan as similarly situated active employees, unless you keep the less expensive option as well. They can't be on a plan that doesn't exist anymore.

The time requirement for notifying COBRA people is the same as for similarly situated active employees. I'm not sure of any penalties for non-compliance with this, except for the ERISA notice requirements for plan changes, for those subject.

Leslie

Thank you! That answers a couple of my questions.

Now this...the "new" plan takes affect 12/01/2003. The COBRA folks have no idea of the rates, whether it's an enhancement of the old plan, or an entirely new plan - meaning new cards, new PPO, new whatever. The woman with the former company is supposed to get back to them but the check needs to be mailed out tomorrow. Do they have any recourse find out what their plan is and the cost? What if something happens on the first and they use the old plan that may no longer exist?

irenesmsaclaims

Did this happen kind of fast? If it's a new plan with a new carrier, the new carrier (although technically an employer responsibility) should have notified the COBRAs along with the actives of new rates, cards, etc. If the premium needs to be sent tomorrow, by you the employer, I would pay for the COBRA people with the new rates, notify them ASAP and adjust the following month. If there's a broker involved, let him or her earn his or her commissions and do some of this work. If they have a claim after 12/1, and file with the old plan/carrier, it will be denied, and should be re-submitted with the new carrier. If it's a new plan with the same carrier, the procedures should be about the same, except for the claim denial/re-submission.

Leslie

It happened real fast - like today. Quick explanation - my significant other started his own company. About six people left with him. Four took COBRA. The company they left does not have an HR department. When his assistant called the old office to verify payment amount, she was told the plan had changed and the woman "thought" the premiums had increased. That's all the info she offered - she said she'd check into it and get back to them. She hasn't. So my SO has his assistant call me - his own personal HR "guru" - with all these questions.

I told the assistant to just send the check in the regular amount and work through any changes later. I'll give them the rest of this info and we'll plow through it as it goes.

You've been a great help - thanks!

irenesmsaclaims

OK, this is a little different, if they are new COBRA Qualified Beneficiaries, but no worries. The company that your SO's people left have the regular 14-day obligation to provide the COBRA notice within 14 days (44 if they have an outside administrator) to all of the people that went with your SO. If they quit with no gross misconduct, the old company has this obligation. It's up to them to send the notice with proper rates, etc. Then they have he 60 days to elect from the time the notice is sent or the qualifying event, whichever is later. If they are COBRA participants already (elected and paying), then the previous advice stands. I just don't know when the "exodus" happened.

Leslie

My SO and his assistant have been on COBRA since September. The other two came over the last week of October/first week of November, so they are just now electing coverage. We have two of each!

COBRA laws state "the employer must do this" and "the employer must do that." Where do you go to report them when they don't?

irenesmsaclaims

The nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Public Disclosure Room, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

The penalty for non-compliance with COBRA election notice is $100 per day.