cobra compliance

We all know that when an employee terminates, he should be offered COBRA.  Beyond that, it starts to get complicated.  That is why BPC offers comprehensive COBRA administration services to save you time and keep your company in compliance. 

COBRA notice requirements begin long before an employee loses coverage.  Let's start with a brief refresher on the beginning of the COBRA process and Qualifying COBRA Events.

What is an Initial COBRA Notice?

Also known as the General Notice, this is a short description of a participant’s rights and obligations under COBRA.  It is to be furnished when a participant first becomes covered under a plan, to ensure that the participant is aware of the right to elect COBRA if they terminate employment or experience another qualifying event at some point in the future. 

When must an Initial COBRA Notice be sent?

The Department of Labor’s COBRA regulations specify that the Initial COBRA Notice should be delivered within 90 days after the coverage begins.  In order to ensure this deadline is met, BPC asks that employers inform BPC of new coverage for employees or spouses within 30 days from the start of coverage.

Who needs to receive an Initial COBRA Notice?

All covered employees and spouses must receive an Initial COBRA Notice once their coverage first begins.  A single notice may be sent to both the employee and spouse, if they become covered at the same time.  If the employee’s spouse becomes covered later than the employee – either because the employee has just married or simply because the spouse is not initially covered on the plan – then an additional notice should be sent on behalf of the spouse.

How do we notify BPC when an employee or spouse needs to receive an Initial COBRA Notice?

BPC will send compliant Initial COBRA Notices whenever needed, and keep detailed mail records to demonstrate that mailing.  Of course, BPC can only send those notices after you provide information about who needs them. Whenever an employee or spouse first becomes covered under your benefit plans, you can notify BPC by completing the Initial Notice Template and uploading it via BPC’s secure website. In some cases, BPC may also be able to coordinate with your payroll vendor or health insurance carrie to receive some or all Initial COBRA Notice information automatically.

What situations require that COBRA be offered?

Employees and their covered dependents should receive an election notice offering COBRA coverage anytime they lose plan coverage due to one of seven specified “triggering events.”  Not all losses of coverage are due to a triggering event, and not all triggering events cause a loss of coverage.  When both occur, you have a Qualifying Event.

What are the seven types of triggering events? COBRA law specifies seven specific triggering events:

  1. Termination of employment

  2. Reduction in hours

  3. Death of employee

  4. Divorce or legal separation from employee

  5. Ceasing to be a dependent child under the terms of the plan

  6. Employee becoming entitled to Medicare

  7. Employer bankruptcy

How is COBRA offered?

Anytime a Qualifying Event occurs, a COBRA Election Notice must be sent to the individuals (employee, spouse or dependents) who lost coverage.  These individuals are referred to as Qualified Beneficiaries.  The Department of Labor specifies various elements that must be included in the COBRA Election Notice, but essentially it notifies a Qualified Beneficiary of his or her COBRA rights, including how and when COBRA coverage may be elected. 

Why is the Election Notice so important?

No step in the COBRA administration process is more critical than providing the Election Notice in a timely fashion. It’s not only required by law, but it also marks the start of a 60-day window within which the Qualified Beneficiary must choose to elect coverage or lose the right to coverage.  If the Election Notice is not sent, or if it is delayed, Qualified Beneficiaries may be able to retroactively elect COBRA well after the normal deadline.  That can leave the employer on the hook for reinstating coverage, or even covering medical expenses.

How do we notify BPC when someone experiences a Qualifying Event?

When you are a BPC COBRA Services client, BPC will send compliant election notices whenever needed, track election deadlines, answer participant questions, and (when someone does elect coverage) collect premiums and reinstate coverage.  Whenever an employee, spouse or dependent experiences a Qualifying Event, you can notify BPC by completing the Termination Template and uploading it via BPC’s secure website.  In some cases, BPC may also be able to coordinate with your payroll vendor or health insurance to receive some or all Election Notice information automatically.

As a BPC COBRA Administration Client, we handle the details so you can stay compliant. For more information or to start services contact us at 800-355-2350.