COBRA Webinar Recap: The New Demands of COBRA

The global pandemic has put new demands on COBRA administration for many employers. Some companies have found themselves administering COBRA for the first time in years, and many are likely a little rusty on their duties.

To offer support in this hectic time, we hosted a webinar with ConnectYourCare’s COBRA experts: Douglas Tonjes, COBRA Client Success Manager, and Glenn Larson, COBRA Solutions Architect. They presented the most common mistakes in COBRA administration, as well as recent COBRA legislative updates that were announced as a result of the COVID-19 pandemic. In addition, they reviewed how to manage continuation coverage during or following a widespread disruption or change to an organization, COBRA alternatives, and ways to handle furloughed employees.

Want to hear this webinar directly from the experts? Skip the recap and watch the on-demand version here.

Most people know that if you have the equivalent of 20 full-time employees on 50 percent of the previous plan year that you have to offer COBRA. However, if COVID-19 has hit your organization hard and significantly decreased your workforce, this likely won’t affect your COBRA eligibility until 2021. That means you are still obligated to offer COBRA this year because you had more than 20 full-time employees in the past. Keep in mind that Under the Affordable Care Act, a full-time employee is one who works 30 hours per week.

Here’s who’s NOT counted:

Most employers understand that COBRA applies to health care benefits. And that includes the following: medical, dental, vision, hearing, prescription, health reimbursement arrangement (HRA), a flexible spending account (FSA), Limited Purpose FSA [pairs with a health savings account (HSA)], and Employee Assistance Programs.

What’s NOT covered under COBRA:

Just because COBRA doesn’t require the continuation of non-health care benefits doesn’t mean a company can’t offer extended benefits through a third-party administrator (TPA). These services, billed directly to the recipient, are called direct bill services (See more on direct billing below).

Along with making sure you meet federal COBRA standards, you need to be aware of any state regulations, also known as mini-COBRA laws, and almost every state and the District of Columbia has them.

The only states that currently don’t have mini-COBRA regulations are Alabama, Alaska, Arizona, Idaho, Indiana, Michigan, and Montana.

State regulations can differ from federal requirements. For example, state regulations may:

We know that in response to COVID-19, some states may institute some emergency regulations to lower the standards required for employees to continue to maintain employer-sponsored health care coverage. The best thing you can do at this time is to get in touch with your state insurance regulatory office or department of labor. That way, you can get accurate information about what you need to do to stay on the right side of the law in your state.

On April 28, 2020, the U.S. Department of Labor’s (DOL) Employee Benefits Security Administration and the Internal Revenue Service issued the EBSA Disaster Relief Notice 2020-01, which extends certain health care benefit deadlines to provide both participants and plan administrators extra time to comply with certain deadlines related to COBRA. Learn more about these notifications in our blog on this topic.

You can also check out the following government resources:

The DOL Announced two new COBRA model notices that expand upon traditional COBRA coverage eligibility in situations where both Medicare and COBRA could surface:

For the second situation, the DOL notes there is an eight-month “special enrollment period” for someone to enter Medicare Part A or B, beginning on the earlier of:

For more details on this topic, check out our blog or visit the government FAQs on New Model Notices from the DOL.

Furloughs can be confusing. A furlough is not a COBRA-qualifying event, unless it results in a loss of group health coverage. If the furlough results in a loss of health coverage, the employer must issue COBRA notices and allow affected individuals to elect COBRA continuation coverage. The terms of the plan document will govern the extent to which health coverage continues.

Although certain coverages do not need to be offered through COBRA, many employers elect to offer them through a third-party administrator. These coverages are called direct bill services and are great ways to offer benefits unrelated to health care, such as dependent care flexible spending accounts and life insurance. These services also allow employers to collect premiums for services that are typically collected through payroll deduction.

Examples of direct billing populations include:

While employers still have to offer COBRA, educating employees on their options can help them make the right long-term health choices for themselves and their families.

Private health insurance exchanges allow employees, or former employees, to comparison shop and receive quotes on individual health plans. This option gives participants access to support tools, knowledgeable and licensed benefit advisors, and technology to make the best decision for them.

Our COBRA solution includes HealthCompare Exchange Solutions as an option for eligible participants to select the solution that best meets their needs, based on their specific situation. Our COBRA-eligible participants are advised of their choice of either COBRA or a HealthCompare plan in their Special Rights Notice, Cancellation Notices, and Conversion Notices.

In addition to COBRA coverage, other health coverage options may be available to employees, such as coverage through the Health Insurance Marketplace. It’s important to remember that employees always have 60 days from the time they lose their job-based coverage to enroll in the Marketplace because this is a “special enrollment” event.  After 60 days they may not be able to enroll, so they should take action right away, or they may have to wait for an “open enrollment” period when anyone can enroll in Marketplace coverage.

Employees may also be eligible to enroll in coverage through Medicaid or another group health plan (like a spouse’s plan), if they request enrollment within 30 days of the loss of coverage.