With all of the recent changes in legislation that impact a variety of Employee Benefits – it is easy to overlook some of the more fundamental, but also potentially challenging, requirements.
Let’s take a closer look at COBRA to call out some of the more frequent challenges that employers may encounter.
Domestic Partners and COBRA – With Same-Sex Marriage being legal nationwide, many employers have been revisiting their Domestic Partner benefits. While most employers that offer domestic partners of active employees access to their group health plans also provide them with a COBRA-like continuation of benefits option – that is not the case for all employers. Does your COBRA treatment of domestic partners align with your treatment for domestic partners of active employees?
COBRA Initial Rights Notices (aka General Notice of Continuation Coverage) – These notices should be sent within 90 calendar days of when and employee or a spouse are newly added to COBRA eligible benefits. Most employers and administrators notify new employees appropriately, but some struggle to send these notifications when spouses are added to an existing employee’s plan. Employers should be sure to notify all newly added employees and spouses within 90 days of when they are first enrolled in a COBRA eligible plan, or immediately following any change in the content of the notice.
Employee Assistance Plans (EAPs) are a valuable resource for employees – but not all EAP plans are alike. If an EAP plan includes counseling services – it may be considered COBRA eligible. Because EAP plans differ, and not all are COBRA eligible, employers should determine if their plans are COBRA eligible and ensure they are offered on the COBRA Qualifying Event Notice.
COBRA Notices are once again making the news – this time as a lawsuit over an employer’s use of a non-DOL Model Notice QEN is awarded class action status. Employers should evaluate their COBRA notices and align them with the DOL Model Notice. At Businessolver, we are reviewing ALL of the COBRA Initial Rights Notices (General Notice) and the COBRA Qualifying Event Notices (Election Notices) to ensure they are all aligned with the DOL Model notice.
Military Leave – the Uniformed Services Employment and Reemployment Rights Act / Veteran’s Benefits Improvement Act – offers a COBRA-like leave for 24-months. Most employers either continue active benefits for employees on Military Leave or offer a 24-month continuation that runs concurrent with COBRA. Is your Military Leave policy up to date?
Termination in Anticipation of Divorce – did you know that Termination in Anticipation of Divorce is a thing? Dropping a spouse from group health benefits ‘in anticipation’ of divorcing them can result in a COBRA Qualifying Event occurring, even if the spouse did not have benefits at the time of the divorce being finalized. For example, an employee drops a spouse at Annual Enrollment, and then finalizes their divorce 4 months later (or even longer). If the coverage was dropped ‘in anticipation of’ the divorce – the ex-spouse should be offered COBRA at the time of the divorce, with the benefits they had prior to dropping them. Of course – not all divorces are reported to employers if benefits are already dropped – but should this occur, you need to be prepared and communicate appropriately.
HCTC and COBRA – the Health Coverage Tax Credit is a tax credit that pays 72.5% of qualified health insurance premiums for eligible individuals and their families. This subsidized coverage can include COBRA – and occasionally comes into play for employer populations eligible for Trade Adjustment Assistance. Could this apply to your populations? Are you providing any communications about this program to your impacted employees?
Health Care Flexible Spending Account – When someone with a Health Care Flexible Spending Account has a COBRA Qualifying Event, they are only required to be offered COBRA if the amount they will owe for the year does not exceed the amount of benefit that they could receive. For this reason, FSAs are generally not offered at Annual Enrollment for COBRA participants (because with the 2% admin fee – the amount owed for the year exceeds, by 2%, the amount of benefit available). At the time of the initial COBRA event, many employers, and most COBRA administrators, forego any FSA account balance comparison – for several reasons, including:
Despite the above issues, it may be time to revisit your particular process.
Now that’s a lot to take in! Feeling overwhelmed? We can take the wheel! Find out how we can help you navigate the complex world of compliance here