COBRA Administration procedures for

Transcription

1 COBRA Administration procedures for CobraHelp has established the following administrative procedures to maintain compliance with the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA. These administrative procedures provide guidance in the everyday administration of the law. With any unique situations, the administrator shall obtain legal support from an appropriate source DEFINITIONS Administrator - The individual performing the daily activities in the administration of the COBRA legislation. COBRA Administrator- CobraHelp COBRA - The Consolidated Omnibus Budget Reconciliation Act of 1985 and its modifications, additions and deletions. Company - Our firm (including all divisions/affiliates/subsidiaries)

2 Employee - A benefit eligible, active Employee of the Company who has enrolled in a COBRA eligible plan. Dependent - A spouse and/or child that is covered under one or more COBRA eligible plans on the day prior to the Qualifying Event. Insurer - An insurance company providing benefits to the Company that are subject to the COBRA legislation. Insurance Plan -. A group health plan such as (but not limited to) medical, dental, long-term care, vision, hearing, free-standing psychiatric and Alcohol/Drug Dependency plans. Participant - An Employee and/or Dependent that has notified the Administrator of their desire to continue coverage, completed the necessary applications and have made premium payments in a timely manner. Qualified Beneficiary (or Qualifier) - An Employee and/or Dependent who experienced a Qualifying Event and is eligible to continue coverage under the COBRA legislation. Qualifying Event - Any of the following six events that an Employee and/or Dependent have experienced is considered a Qualifying Event. In addition to experiencing the event, there must be a subsequent loss of coverage. Qualifying Events and Maximum Time Frame Under COBRA Termination of Employment (18 month maximum) Reduction in Work Hours (18 month maximum) Death of Employee (36 month maximum) Divorce or Legal Separation of An Employee (36 month maximum) Employee Becomes Entitled to Medicare (36 month maximum) Loss of Dependent Status (36 month maximum) BRIEF DESCRIPTION OF COBRA Employers with twenty or more (with some states reducing it to two) employees providing health insurance benefits must offer a temporary extension of the Company s group insurance coverage when an Employee (or covered Dependent) experiences a Qualifying Event. Since COBRA is a temporary extension, benefits remain identical to that of an active Employee. The Participant is responsible for paying the group s premium (plus 2% administration fee) and the Administrator is responsible for reimbursing the Insurer. COBRA continuation coverage offers individuals increased time to obtain new coverage and should not be viewed as a permanent plan. Qualified Beneficiaries should be offered the same rights as similarly situated active Employees. ELIGIBLE QUALIFIERS Covered Employees and/or Dependents experiencing one of the qualifying events explained above is eligible to continue coverage under the COBRA legislation. If they are enrolled in more than one plan,

3 each covered family member (called a Qualified Beneficiary) may select which plan he or she would like to continue. For example, a person having family coverage for both medical and dental insurance may elect to continue just medical or dental and can enroll the entire family or just one Qualifier. Qualifiers may only continue with plans in which they were enrolled on the day prior to the Qualifying Event (unless they move from an Insurer s service area and another plan is available or the Qualifying Event occurs during Open Enrollment and similarly situated active employees have the ability to change plans). Effective January 1, 1997, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) expanded eligibility under COBRA to include a child born to (or placed for adoption with) the employee will be granted all rights of a Qualified Beneficiary. In the past, a person who experienced a Qualifying Event and had coverage from another source (i.e. Medicare or other group coverage), the employer did not have to offer COBRA continuation. A Supreme Court ruling has changed the law so that COBRA must be offered to any Qualifiers, regardless of other coverage enforce at the time of the Qualifying Event. If a Qualifier is initially denied insurance on a group plan, has the denial reversed and during that time frame experiences a Qualifying Event, COBRA continuation coverage should be offered. Employer-provided notices Notifying the COBRA Administrator: The employer shall notify the COBRA administrator of a qualifying event no later than 30 days after the date of the qualifying event or for any plan under which continuation coverage begins with the date of loss of coverage, the 30-day period for providing the notice of qualifying event must also begin with the date of loss of coverage, rather than the date of the qualifying event. The employer is required to provide sufficient information to enable the COBRA Administrator to determine the identity of the plan, the covered employee, the qualifying event and the date of the qualifying event. COBRA NOTIFICATIONS The following are notifications that are required by the COBRA legislation to be distributed by first class mail through the US Postal Service to both Employees and covered Dependents, where applicable. General Notice (commonly referred to as Initial Rights Notice) All Employees and covered Dependents will be sent a General COBRA notification letter stating their rights under the law. As new Employees are hired and enroll in one of the group plans, both the Employee and covered Dependent(s) shall be sent a General COBRA Notification letter explaining their rights. These notifications should be sent to the last known address of the Employee (and/or Dependent if different). Delivering the notice at the workplace to a covered employee is deemed adequate for the employee, but would not constitute notification to the spouse. The notice must be furnished to each employee and spouse no later than the earlier of: 1. Either 90 days from the date on which the covered employee or spouse first becomes covered under the plan or if later, the date on which the plan first becomes subject to the continuation coverage requirements; 2. The date on which the administrator is required to furnish an election notice to the employee or to his or her spouse or dependent. The notice shall be updated to reflect any changes in the law or court decisions pertaining to the law. The General COBRA Notification shall also be mailed to Dependents added to the Employee s plan during Open Enrollment or when a Change in Life Status is experienced. The importance of the General COBRA Notification cannot be overemphasized. The General

4 COBRA Notification explains the rights of Employees and Dependents under COBRA and the procedures for notifying the Administrator when a Qualifying Event (or disability) has occurred. If this notice is not sent, the Employer may be held liable for claims of Qualifiers. Qualifying Event Notification There are six Qualifying Events that require the Administrator to notify the COBRA Administrator to send a Qualifying Event Notification. Three of the events require the Administrator to automatically notify the COBRA Administrator to send a letter upon realization of the event; the other qualifying events require the employee/dependent to notify the Administrator. Termination of Employment, Reduction in Work Hours or Employees Death - When one of these events occur, the Employee and any covered Dependents shall be sent a COBRA Qualifying Event Letter which explains their rights under the law. The letter shall be sent by the COBRA Administrator to the last known address within fourteen (14) days from the date notified by the administrator. This letter should be updated to reflect any changes in the law or court decisions pertaining to the law. In the situation of an Employee s Divorce or Legal Separation, Medicare Entitlement or Loss of Dependent Status; it is the responsibility of the Employee/Dependent to notify the Administrator of the Qualifying Event within sixty (60) days of the later of (1) the qualifying event; (2) the date coverage is lost due to the event; or (3) the date on which the qualified beneficiary is informed, through the plan s SPD or the general COBRA notice, of his or her obligation to provide notice and the procedures for providing such notice. If the Administrator is informed (or is not informed but is aware of the situation) by the Dependent, the Administrator shall notify the COBRA Administrator within 30 day of the date notified. The COBRA Administrator shall send a COBRA Qualifying Event Letter to the affected Dependent(s) within fourteen (14) days from the date they were notified. The Qualified Beneficiary will be given sixty (60) days from the later of the Qualifying Event date, the date coverage is lost or the postmark date of the notice to inform the COBRA Administrator of their decision to continue one or more of the Company s group plans. Upon notification, the COBRA Administrator will have the Qualified Beneficiary complete the necessary COBRA enrollment forms and the premiums due and submit them immediately to the administrator for them to submit to the appropriate Insurers. Notice of denial for COBRA coverage The administrator or COBRA Administrator, after receiving a notification of a qualifying event, will notify qualified beneficiaries if continuation coverage was denied and explain why the individual was not entitled to the coverage. This notification will to be sent within 14 days after receipt of the notice of a qualifying event. This notice would only be required in accordance with notices that are required by Qualified Beneficiaries to be furnished to the administrator. However, no matter the basis of the denial, whether it would involve the first qualifying event, second qualifying event or a request for a disability extension, if the individual was not eligible for coverage because there was no qualifying event or because of timeliness, the unavailability notice would still be required. Conversion Privilege Notification If available to active employees, COBRA Participants will be offered the right to continue under a conversion (individual) plan per the guidelines set forth by the associated Insurer. The conversion notification will be sent approximately (but not earlier than) one-hundred eighty (180) days prior to the end of the Participant s COBRA termination (either eighteen or thirty-six months). Participants shall be directed to contact the appropriate Insurer for further information on conversion coverage. Notice of Termination A notice of termination of continuation coverage shall be provided for any coverage that terminates prior to the end of the maximum coverage period. The notice will include the reason for termination and the

5 date of the termination as well as any rights the Qualified Beneficiary may have under the plan to elect alternative group or individual coverage, such as a conversion right. This notification shall to be sent as soon as practicable by the COBRA Administrator after determination that continuation coverage has terminated. Certificate of Coverage With the passage of the Health Insurance Portability and Accountability Act of 1996, the Administrator will provide a Certificate of Coverage to individuals (both as a Qualifier and Participant) that experience a loss of coverage from any or all of the Company s group plans. The Certificate of Coverage will detail the individual s coverage start and completion dates. The COBRA Administrator shall provide HIPAA post employment and post COBRA if so contracted. Qualifier s Notification of COBRA Acceptance Once a Qualifier has notified the COBRA Administrator of his/her desire to continue coverage, the COBRA Administrator shall see the Qualifier(s) receives the necessary COBRA applications. The completed applications shall be forwarded to the administrator so that they can have the COBRA Participant reinstated with the appropriate Insurers. The Administrator should monitor to verify that the Participant shows on the billing statements. If not, the Administrator should contact the Insurer immediately and re-send the COBRA application. PREMIUM PAYMENTS Monthly Premiums COBRA Participants shall be charge the group rate (the amount charged by the Insurer for a similarly situated active Employee) plus an administration charge (between 0% and 2% of premiums). COBRA Premiums shall not be changed at times other than annual insurance renewal, a change in Dependents or if a Participant is determined by Social Security Administration to be Disabled. If a Participant is determined to be disabled the Company may charge an increased administration fee (between 0% and 50% of premiums). Upon receiving renewal rates, the Administrator shall notify the COBRA Administrator. The COBRA Administrator shall notify the COBRA Participants of the new premiums. If the individual deemed disabled elects not to continue during the eleven month extension, the remaining family unit should be charged the standard administration fee (and not the 50% for disabled Participants). Premium Due Date COBRA Participants must make timely premium payments to continue under the Company s group plan(s). There are two (2) different grace periods that shall be offered to COBRA Participants prior to termination from any plan. Initial Grace Period - Upon notifying the COBRA Administrator of their desire to continue, the COBRA Participant will have a forty-five (45) day grace period (commencing on the date the COBRA Participant elects (postmark date) the continuation coverage to make their first premium payment. Subsequent Grace Period - For all remaining COBRA premium payments, the Participant shall be provided a thirty-one (31) day grace period. In the event a Participant s premium is short by an insignificant amount, a notice will be sent by the COBRA Administrator requiring the additional premium. The COBRA Administrator will use the postmark date as the determination if a payment is made in a timely fashion.

6 COVERAGE UNDER COBRA Since COBRA is a continuation of benefits, coverage/benefits remain the same as prior to the Qualifying Event. If the Company elects to change plans and/or benefits, COBRA Participants would be eligible to enroll in the changed plan, therefore receiving identical benefits as a similarly situated active Employee. If a plan has deductibles and coinsurance maximums, a new determination (i.e. amounts satisfying deductible and coinsurance maximums) will be made based upon expenses incurred prior to the Qualifying Event of only family members continuing under the plan. COBRA Participants that move from the plan s service area may lose coverage under the group plan (as would a similarly situated active employee). If our firm offers a plan that would provide coverage in the new area, the COBRA Participant should be offered the right to enroll in the new plan. The law states that a COBRA Participant may be terminated from a plan upon receiving other coverage. It should be understood that if an individual was enrolled on a plan (i.e. Medicare) prior to their COBRA election, they shall still have the right to continue coverage under COBRA. OPEN ENROLLMENT COBRA Participants are offered the same rights as similarly situated active Employees during Open Enrollment. They may change plans and add/delete eligible Dependents. Although part of the family unit, Dependents added during Open Enrollment will not have the same COBRA rights as the initial Qualified Beneficiaries. DISABLED COBRA PARTICIPANTS Qualified Beneficiaries that experienced either a Termination of Employment or Reduction in Work Hours and who are disabled within sixty (60) days of their COBRA qualifying event date shall be offered an eleven (11) month extension. Participants shall be required to provide Social Security s Determination of Disability within sixty (60) days from the date of notification and prior to the end of the eighteen (18) month COBRA period. Both the disabled COBRA Participant and his/her Dependents on the plan will be eligible for the eleven (11) month extension. MULTIPLE QUALIFYING EVENTS Dependents who have experienced either Termination of Employment or a Reduction in Work Hours along with the Employee shall be offer a total of thirty-six (36) months COBRA continuation if they experience another (or Multiple) Qualifying Event. The thirty-six months will commence from the Employee s original Qualifying Event date. It is the responsibility of the Dependent to notify the Administrator or the COBRA Administrator of the Qualifying Event within sixty (60) days of the event. (If a termination of employment follows a Reduction in Work Hours, the maximum time frame offered for COBRA continuation coverage shall be eighteen months). TERMINATION FROM COBRA COBRA Continuation Coverage shall terminate upon one or more of the following events: Insurance Plan Termination If the Company terminates a group insurance plan for active employees, COBRA Participants shall be notified and terminated from that plan only. If the Company offers a new similar type of Insurance Plan, the Administrator shall offer COBRA Participants the right to enroll in the new plan.

7 Nonpayment of COBRA Premiums COBRA Participants will be terminated for nonpayment of premiums if premiums are not postmarked within the applicable grace period. Coverage Under Another Group Plan For COBRA Participants that obtain similar coverage under another group plan, the COBRA Administrator will notify the Participant of their termination from the Company s Insurance Plan. Prior to termination, the COBRA Administrator will review with the Participant, the new group plan s preexisting condition limitations. If the Participant s new group plan does not cover a preexisting condition, the Participant may continue under the Company s group plan until the end of the COBRA period or until the preexisting condition is covered under the new plan. Medicare Entitlement Once a Participant becomes entitled to Medicare (Part A and/or B), the COBRA Administrator may terminate COBRA Continuation Coverage. Prior to termination, the COBRA Administrator shall contact the Participant, establish a date of termination so that there will be no lapse in coverage. Dependents enrolled on the Medicare Entitled person s plan may continue to the end of their COBRA period. Out of Insurance Company s Service Area If a Participant is enrolled in an insurance plan that requires members to reside in a specific geographical area and they move from that area, the COBRA Administrator shall notify the Participant and terminate coverage. If another similar plan is available in that area, the COBRA Administrator shall offer the plan to the Participant. Coverage may be terminated for cause for fraudulent claims or other activities in which a similarly situated active employee would be terminated. If a disabled COBRA Participant is deemed to no longer be disabled during the eleven month extension, the entire family unit may be terminated. End of COBRA Period Once the Participant has reached the end of their COBRA time frame (either 18, 29 or 36 months), the COBRA Administrator shall send a termination notice. The Participant shall be offered the right to convert to an individual plan (where available) that has no preexisting condition limitations. In addition, the Company will provide a Certificate of Coverage detailing their completion of COBRA. This will allow them to apply for an individual plan without having preexisting condition limitations. COBRA Participants have the right to a hearing if they disagree with any termination. At the Participant s request, the Administrator shall set up a hearing and have the appropriate Company managers attend to review the termination and decide on its validity. COBRA DOCUMENTATION The COBRA Administrator will document every Qualifying Event, Qualified Beneficiaries electing COBRA, selected plans and premium payments. Reports will be completed on a monthly basis, filed and maintained for a minimum of seven (7) years. Files will also be maintained for all Qualified Beneficiaries and will house copies of Initial COBRA Notification, Qualifying Event Letter, and Conversion Notification (where applicable); Applications (if elected), COBRA Termination Notification and other COBRA related documents.