As a business leader it’s difficult to keep track of every single requirement, act, or law that applies to your business. However, most of these laws have consequences for falling out of compliance that you’d rather avoid. One law that can get confusing is the Consolidated Omnibus Budget Reconciliation Act, more commonly known as COBRA. This act regulates the extension of benefits after employee termination and other qualifying events. Here are some of the most important things for you to know about COBRA compliance:
Who Qualifies
Employees that qualify for extended benefits under COBRA are employees that had access to group benefits before a qualifying event. In some cases, employee spouses or dependents are also provided extended benefits under COBRA.
Qualifying Events
Qualifying events are events that cause an employee to lose benefits that they previously had access to. Qualifying events for an employee include termination of the employee for reasons other than “gross misconduct” or reduced hours that cause the employee to lose their benefits. Qualifying events for an employee’s spouse or dependent include, in addition to the previous reasons, a covered employee becoming entitled to Medicare, divorce or separation from the employee, or death of the covered employee. A dependent of the covered employee can also receive COBRA coverage after loss of dependent status until they turn 26.
Notices
Part of compliance with COBRA is in sending out notices in a timely fashion. The first notice employers need to worry about, is a notice with the details of the group benefits plan. This should include who qualifies for benefits, what benefits are included, and how the plan works. The next notice is called a General Notice. This is sent to all covered employees up to 90 days after they join the benefits plan to inform them that they will be eligible for COBRA if a qualifying event were to happen. Another notice is the Qualifying Event Notice. As you can tell through the title, this notice is sent to the employee up to 30 days after a qualifying event occurs. The Election Notice is sent 14 days after the Qualifying Event Notice and includes all COBRA information. Other notices may need to be sent in special circumstances. To download a guide for sending COBRA notices, click the download button below.
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How Long
How long COBRA stays in effect for each employee depends on the qualifying event. Generally, COBRA stays in effect for either 18 or 36 months. In some cases, where there is a disability or a second qualifying event, COBRA coverage can be extended. COBRA can also be denied or cancelled if the employees don’t pay their premiums, the employer stops offering benefits, or if the covered employee participates in behavior that justifies termination.
Staying in compliance is necessary to your business’ success. While many group health plan providers or brokers offer COBRA administration (or can recommend a third-party administrator who can help facilitate), it is ultimately the employer’s responsibility to ensure compliance with these complex regulations including time notifications to employees. Use this advice to make sure you’re in compliance with COBRA.