COBRA/Cal-COBRA ADMINISTRATION
A desk covered in piles of semi-sorted paperwork. A computer stalled with ten applications running. A coffee cup with the cold remains of the morning’s third dose of caffeine. You thought you had enough work to do running your company. Now you have to keep up with COBRA administration?
Signed into law in 1986, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers who provide group health plans to offer extended coverage at the group rate to employees in certain instances where coverage might otherwise be terminated. COBRA benefits come into effect the day after what is referred to as a “qualifying event.†Qualifying events are events such as voluntary or involuntary termination of employment or a significant reduction in the number of hours of employment that would normally cause an employee to lose health coverage. If the employee is eligible and applies for COBRA benefits, the company must continue to provide them with coverage at the group rate for up to 18 months. During this time, premiums cannot exceed 102 percent of the previous rate. Coverage may end earlier if premiums are not paid on time, the employer ceases any group health plan, the employee obtains equal coverage with another employer’s group plan, or if a beneficiary becomes entitled to Medicare benefits.
COBRA regulations apply to employers with 20 or more employees. Beneficiaries include the covered employee, as well as their spouse and dependent children. Qualifying events for spouses and dependent children include the death of the covered employee, divorce, or loss of dependent child status.
Cal-COBRA regulations apply to small businesses in California with group health plans that cover 2 to 19 employees. Cal-COBRA benefits allow employees to keep group insurance costs for up to 36 months. If an employee uses up their 18 months of Federal COBRA benefits, they may buy up to 18 more months of health insurance under Cal-COBRA.
COBRA and Cal-COBRA regulations can be complicated, and penalties for noncompliance are expensive, costing companies from $100 per day for each day of no-compliance to $2500 for every employee affected. Experts at William J. King & Associates are happy to answer all of your COBRA and Cal-COBRA administration questions and provide you with the support you need to have the most efficient health coverage program possible.
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