It Might Be Time for Your COBRA Check-Up

With the recent extension and expansion of the ARRA COBRA premium subsidy, employers are once again performing their due diligence to prepare for the new compliance requirements. This time, however, the new provisions may also provide opportunities for employers to fully evaluate their COBRA program, as well as the qualifications and effectiveness of their COBRA administrator. With additional obligations in meeting deadlines, issuing new notices, and managing subsidy payments, it is more important than ever for businesses to ensure their COBRA program meets the needs of both the employee and the employer.

Keeping Up with Compliance
Many businesses have found it difficult just to keep pace with the requirements of the premium subsidy, which is why a third-party administrator has become a popular option for COBRA administration. A well-run TPA often serves to protect employers from the fines and claims liability that can result from non-compliance with the most current COBRA regulations. The most effective TPAs have a solid footing when it comes to responding to new compliance issues in a timely manner and keeping their clients well-informed of their obligations. Prepared and accurate documentation, a thorough support staff, and a defined plan of action are all signs of an effective COBRA vendor.

For employers that self-administer COBRA, they will need a firm grasp on the new compliance considerations in regard to the ARRA subsidy extension to 15 months and the eligibility period expansion to February 28, 2010. In addition to their usual obligations, employers must now ensure retroactive reinstatement of COBRA coverage for assistance-eligible individuals (AEIs) who have already exhausted their nine-month subsidy but have not paid the full premium. They must also effectively notify AEIs regarding the subsidy extension and eligibility expansion, as well as reimburse them if they have overpaid their premiums. (For further discussion of the COBRA subsidy extension and the resulting compliance obligations, please see the HCW Compliance Alert dated December 22, 2009.) These requirements can be a great deal of burden on the employer – unless a TPA can provide services to do the work for them.

Understanding the Services Provided
Depending on the vendor, there can be a wide variety of services available for COBRA administration. The employer should take note of which services are expected of the TPA, so they will understand if they are receiving the full value of their contract. Usually, a full-service COBRA administrator will provide such things as: issue notices and letters to qualified beneficiaries, collect and reconcile premiums, and provide eligibility reporting.

For self-administering employers, or for those do not receive the above services from their TPAs, there are various resources available that can provide help. Most model notices are available at the COBRA page of the DOL website; although the most current notices in regard to the subsidy extension are still under development and are expected to become available in early January 2010. Additionally, various associations like the Society for Human Resource Management (SHRM) may have additional resources to assist member employers with COBRA. Other useful HR online services such as MyHRView also offer helpful tools and forms that can ease the administrative strain on employers.

Providing Access to Support
When employees seek support from the employer, many expect replies to their requests will be made within 24 business hours – and the same can be said with respect to COBRA administrators. In fact, if the TPA cannot provide adequate response time, employees may bring their inquiries directly to the employer – which defeats the purpose of hiring a TPA in the first place. Whether responses are delivered through a TPA or not, employers should ensure that communication channels are in place to provide timely and adequate support for any issue that may arise.

Balancing Costs and Employee Satisfaction
For many employers, outsourcing COBRA is always a worth-while expenditure, especially considering how its administration is so often complex and cumbersome. However, doing so should never be cost prohibitive. Employers should always evaluate the fee structure with their current TPA and analyze if the agreement is cost-effective.

In turn, it is also necessary to gauge employee satisfaction with the TPA’s services, or the program in general if the employer is the administrator. Employee opinion can be a true indicator of the TPA’s or program’s effectiveness, and it will help identify areas that need to be addressed.

For more information, please click on the following links:

Keys to Evaluating Your COBRA Administrator

COBRA Subsidy Extension and New Notice Requirements

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Don't forget to visit the HCW Wellness Corner at www.hcwbenefits.com!

By visiting the HCW Wellness Corner, employers can order various resources to help them initiate, strengthen and/or enhance their wellness initiatives. Best of all, these resources can be sent directly to the employer completely FREE OF CHARGE!

So visit the HCW Wellness Corner today at www.hcwbenefits.com, and let us help you get your company on the road to wellness!

Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.

December 31, 2009

Hill, Chesson & Woody strives to keep our clients' group decision makers abreast of trends influencing the employee benefits market. Look for Eyes on Benefits to bring you news and information affecting you and your employees.

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