33 years ago in 1985, then-President Ronald Reagan signed the Consolidated Omnibus Budget Reconciliation Act (COBRA). This act mandates insurance programs continue clients’ health insurance coverages after leaving their job. This makes sure that employees do not lose their health insurance coverage after losing their employment. These benefits usually last anywhere between 18-36 months, unless stated differently by state law mandates. In many cases, COBRA doesn’t apply to plans sponsored by the Federal Government, churches or religious-focused groups.
- What To Know
As great as it is, COBRA is not for every applicant, employer or employee. Job employers with 20-plus employees are required to offer COBRA coverage. Employees must be notified of this coverage. COBRA is sponsored by many state governments and local governments. With that out of the way, qualifying for COBRA requires specific criteria. These criteria include (but are not limited to) the following:
- An employee who has a dependent child is covered immediately
- Applies only to involuntarily terminated employees
- Reduction in the number of hours of employment
- Divorce or legal separation of the covered employee’s spouse
For more useful information regarding the COBRA benefit (such as the general process of applying for the subsidy), the IRS has posted a thorough Q&A.
- Avoid Lawsuits
COBRA administration has employer and participant records for tasks involving COBRA billing and consumer-directed healthcare administration. Seamless COBRA billing makes the payment-received process as painless as possible for both parties involved. Depending on the particular cobra software you choose, you could potentially handle FSAs and HRAs within the same program.
As COBRA is state and federally regulated, compliance notices are continually updated that must be adhered to. One area involves payment; COBRA billing means you will not miss COBRA-regulated deadlines for employee payment, which can potentially lead to expensive lawsuits. These lawsuits can cost you thousands of dollars (in addition to the funds you’re already paying the former employee and any beneficiaries).
For employers, managing COBRA enrolment can be a time-consuming process. Especially if you’re currently employing more than 20+ people, each with various health needs and requirements that leaves your HR department in a headache. COBRA-related solutions prevent Department of Labor fines and fees; the particular specific services vary between different COBRA-compliance specialists.
However, any quality service definitely allows employers to monitor COBRA administration anywhere they are, offers customisable pricing options, and has an open enrolment system that us automated (all in real time). COBRA software helps automate the entire process, as quality management software notifies you when qualified applicants “move” through the eligibility process. As technology advances, automation is becoming a staple of daily life.
This undoubtedly frees up more time from your busy schedule so you can tackle other, equally-important areas of your hectic day. (Such as ensuring all team members within your departments are as fulfilled and productive as possible.)
Least of all, offering COBRA to potential employees and future team members may make your company/organisation attractive. More than any other time in the past, workers (especially Millennials) these days are wary of becoming a member of companies and businesses. You can cut down part of their scepticism by offering to support them for a period of time after they have left your employ. This generosity makes you (and your company) seem more trusting than other businesses that don’t offer COBRA.