Title Goes Here. COBRA: Common Mistakes for HR Professionals. Banyan Consulting. Eric D. Penkert. June 4, Presented By:

Transcription

1 Title Goes Here COBRA: Common Mistakes for HR Professionals Banyan Consulting June 4, 2013 Presented By: Eric D. Penkert

2 Agenda Brief Overview Common Mistakes Special Rules

3 What Does COBRA Require? Covered group health plans must offer continuation coverage at group rates to covered employees, spouses and children (Qualified Beneficiaries) who otherwise would lose coverage because of certain events (Qualifying Events).

4 What Employers Are Covered? Employers Having 20 or More Employees on at Least 50% of Working Days in the Preceding Calendar Year A part-time employee is a fraction of an employee Include all related companies Include employees outside the U.S.

5 What Is A Qualifying Event? One of several specified events that causes an employee and/or family member to lose coverage, including: Covered employee s death Covered employee s termination of employment (except due to gross misconduct) or reduction in hours Covered employee s divorce or legal separation Covered employee becomes entitled to Medicare Covered child ceases to qualify for coverage Employer s bankruptcy if causes loss of retiree coverage

6 What Is NOT A Qualifying Event? Employee s termination for gross misconduct Employee s decision to cancel family coverage (except when made in anticipation of a Qualifying Event) FMLA leave Leaves or other reductions in hours that do not result in loss of coverage Employee is transferred or promoted to an ineligible class Employer cancels certain group health plan options or goes out of business and ceases to provide a plan Change in insurance carrier Cancellation of coverage for ineligible individual Cancellation of coverage for cause or failure to pay premium

7 Common Mistakes Failure to Recognize Loss of Coverage Resulting from Reduction in Hours as Qualifying Event Plans are often structured with a 30 hour per week threshold Falling below the threshold results in a loss of coverage due to a Reduction in Hours Leaves of Absence

8 Common Mistakes Overlooking State Continuation Coverage Laws Typically will only apply to insured plans State law often less than what COBRA requires Some states, however, have quirky rules

9 Common Mistakes COBRA Must be Offered for: Health FSAs, vision, dental and some wellness plans Health FSAs have their own special COBRA rules Note, however, that COBRA rights may not be meaningful for some plans i.e., paying premium for weight loss program

10 What Health Plans Are Covered? Plans offered by employers that provide or cover medical care, including: Major medical & hospitalization plans High deductible health plans HMOs and PPOs Dental and vision plans Prescription drug coverage Health FSAs HRAs Some wellness plans Some employer-provided on-site medical clinics

11 What Plans Are NOT Subject To COBRA? HSAs Disability plans Life insurance plans Accidental death & dismemberment plans Long-term care plans Most EAPs Most wellness programs Vacation benefits Employee on-site clinics that provide only minor first aid for injuries during working hours Exercise/fitness programs

12 Common Mistakes Medicare Entitlement Medicare Secondary Payer rules prohibit termination of health plan coverage for active employee Medicare is never an original Qualifying Event.

13 Common Mistakes Coordinating with FMLA, USERRA, etc. COBRA normally not affected by FMLA leave FMLA leave followed by another leave of absence When is the loss of coverage? Interaction with USERRA 24 Month Continuation

14 Common Mistakes Retirees Failing to offer COBRA to Retirees When does Qualifying Event occur for retirees? Time of Retirement if retiree loses coverage in the active employee plan at that time

15 Common Mistakes Dropping Participants When Changing Insurance or TPAs COBRA participants must be allowed to continue coverage Also, consider employees who have not yet elected COBRA COBRA Qualified Beneficiaries are Entitled to the Same Open Enrollment Procedures as Active Employees

16 Questions Thank you! (864)