COBRA
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COBRA is the most commonly outsourced HR function. Since 1995, BASIC has developed the best practices for COBRA, ensuring consistent and reliable compliance. BASIC takes the majority of liability off of employers.
BASIC CDA is now a single sign-on solution that lets employers manage Benefits and Benefit Continuation (COBRA) services – no more switching between systems!
With a single app, participants can manage all their BASIC benefit accounts and COBRA plans.
MyCash is an unrestricted post-tax reimbursement account linked to participants’ BASIC Cards.
All employers with over 20 employees on 50% of their typical business days in the preceding calendar year.
To ensure your company is compliant with all COBRA regulations, request a proposal today!
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1986, commonly known as COBRA, provides for continuation of existing group health plan coverage for qualifying employees, covered spouses, and covered dependents. Employers who must comply with this law meet the following qualifications: they employ 20 or more employees on at least 50% of the typical workweek days. Part time employees are counted and if employee counts drop below 20 participants, the current employees still qualify due to the grandfather clause.
Which plans require COBRA continuation coverage?
Many employers incorrectly believe COBRA only applies to medical plans, often referred to as health insurance. However, COBRA applies to most group health plans and must be offered after a qualifying event results in loss of coverage. Group health plans consist of a plan, fund, or program established or maintained by an employer that provides some type of medical care, such as health, dental, vision. Healthcare FSAs, HRAs, and many Wellness and EAP programs.
What are the COBRA notice requirements?
Employers subject to COBRA must notify the administrator of their group health plan no more than 30 days after a qualifying event resulting in an employee’s loss of coverage. The plan administrator must then inform the affected employee of their rights under COBRA, no later than 14 days after receiving the notification from the employer. Should an employer also be the administrator of their group health plan, they have the full length of time above, 44 days, to provide a COBRA election notice to the employee.
How long does COBRA last?
Under COBRA, continuation of health coverage starts from the date the covered employee’s health insurance ends and, depending on the type of qualifying event, may last for 18 months, 29 months or 36 months. BASIC explains the different time frames in depth here.
What is State Continuation vs. COBRA?
While federal COBRA applies to employers with at least 20 employees, State Continuation refers to individual state laws that allow for health plan continuation for employees whose employers are not subject to COBRA. State Continuation, sometimes called “mini-COBRA”, is similar to COBRA but the laws change frequently and each state has their own rules.
Forty states have enacted “mini-COBRA” laws that require smaller organizations to provide COBRA benefits. In addition, just like federal COBRA, mini-COBRA laws require employers to offer continuing health coverage to employees who lose coverage after a qualifying event. Coverage varies by state but can last anywhere from two months to indefinitely if the employee meets certain conditions.
Small employers in these 40 states will need to understand these mini-COBRA laws and learn how to calculate COBRA premiums.