Ceridian helps employers with COBRA regulations
Benefits professionals are well aware of the Consolidated Omnibus Budget Reconciliation Act (COBRA) and its due diligence requirements and complexities. With the ever-changing legalities of HR benefits, it's even more important to make sure your organization is in compliance -- because one small oversight can have costly consequences.
What is COBRA?COBRA is a law that provides health insurance coverage for qualified employees, and their eligible dependents, who have lost coverage due to a qualifying event. Such events include employment termination, resignation, reduced hours, divorce, death or other loss of eligibility. An employee has a right to continue insurance coverage under their former employer's group health plan for up to 18 months, as long as the former employee (participant) pays for the cost of this coverage. If the employee's spouse and dependents were covered during the employment period, their coverage is also extended at 102 percent of the cost of the premium that includes the total of both the employer and employee premium. COBRA regulations generally apply to all group health plans, such as medical, dental and vision plans, that are sponsored by private sector employers with 20 or more employees. As an employer, your organization is responsible for ensuring that employees are properly notified of their COBRA rights and qualifying events. Reasonable procedures for electing to continue insurance coverage must be established and communicated to employees. Is your organization compliant?
COBRA regulations are complex. They are difficult to interpret and are constantly changing. As a result, many companies fall out of compliance with COBRA regulations, which can be a costly mistake. The IRS charges noncompliant employers an excise tax of $100 per day, per qualified beneficiary -- up to a maximum of $500,000. ERISA penalty fines for noncompliance cost plan administrators an additional $110 per day per event. In addition to these fines, employers may be required to pay for medical claims not covered by insurance, as well as for litigation fees. Companies can unknowingly make simple mistakes. Are you sure your organization is completely compliant with the most recent legislation? If brought into question, can you prove that your organization followed all required steps? Consider these questions:
- Were your COBRA policies, procedures and materials developed with the aid of an ERISA attorney?
- Do you provide written notification of COBRA rights to each newly covered employee and each spouse?
- Is your staff trained to answer questions from attorneys that challenge your position?
- Are you sure that all COBRA notices, letters and forms are properly worded with the most current Department of Labor (DOL) and COBRA regulations?
- If you were to refuse an untimely election or payment, could you prove that it was late?
If you answered no to any of these questions, your organization could have a problem. Of course, compliance is very complex and there are many aspects of COBRA regulations to consider.
Is there an easier way to ensure compliance?Yes! As the nation's largest COBRA service administrator, Ceridian can help minimize your risk by keeping detailed records and keeping current with ever-changing regulations for you. Let our experts handle the complexities of COBRA. Ceridian:
- Administers initial notification of COBRA rights and obligations.
- Administers COBRA qualifying event notices.
- Addresses participant questions and issues.
- Provides monthly participant billings including grace period notification (if applicable) and collection of premiums.
- Retains proof on all critical transactions.
Ceridian stays current on COBRA regulations by employing ERISA law firms to help analyze and interpret laws and stay up-to-date on court cases that affect COBRA. As changes occur, Ceridian updates the COBRA system, as well as our clients, to ensure you stay in compliance.
Ceridian not only ensures compliance, but also has a great return on investment. Try our COBRA Claims Savings Calculator to calculate potential savings with our comprehensive COBRA compliance services. For more information on Ceridian's COBRA Administration Services, contact your Ceridian representative.
