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Business Changes that Impact COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their dependents who lose health coverage benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time.

Circumstances that would allow for continuation over coverage include voluntary or involuntary job loss, reduction of work hours, a transition between jobs, death, divorce and other life events. Individuals that qualify for continuation of coverage may be required to pay up to 102% of the cost of the plan.

COBRA generally requires that employers that sponsor group health plans with 20 or more employees offer employees and their dependents the opportunity for an extension of health coverage where coverage under the plan would normally end.

Employers should be particularly aware during open enrollment to ensure that all enrolled and pending COBRA participants are sent open enrollment packets and given the same amount of time to make election changes as active employees.

In the event, that an employer decides to change COBRA administrators, keep in mind the following:

  • All active and pending COBRA participants should be sent a takeover packet with new payment instructions.
  • Notify the prior COBRA administrator at least 30 days in advance of the termination (check your contract because some administrators require more time).
  • Consider any file feed setups that may terminate and make certain that you have a way to report COBRA Qualifying Events during the transition to a new administrator.

Review OneDigital’s Guide to Navigating COBRA Qualifying Events for a list of frequently asked questions. Consider taking the burden of COBRA off of your organization by outsourcing your COBRA administration and discuss available solutions with your OneDigital Consultant today.

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