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COBRA Administration: Are CPS’ Offerings Right For Your Business?

by Kristen McNeish on Dec 2, 2021 8:25:20 AM

If you have 20 or more employees, you need to offer Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage to eligible employees and their family members. And administering COBRA correctly is critical to avoiding costly fines – a tax penalty of $110 per employee or family member for each day of noncompliance! Since there’s so much at stake, many employers choose to outsource COBRA administration to a third party administrator (TPA).

At Complete Payroll Solutions, we are a TPA to thousands of companies, helping them ensure compliance with COBRA rules and requirements. To help you understand what we offer to decide if we may be a good fit for your business, here we’ll discuss:

  • What’s involved with COBRA administration
  • Can I handle COBRA administration myself
  • What’s included in Complete Payroll Solutions’ COBRA administration
  • How much does Complete Payroll Solutions COBRA administration cost

After reading this article, you’ll be able to decide if Complete Payroll Solutions is the right TPA for you.

What’s involved with COBRA administration?

If your business is covered by COBRA because you have 20 or more full-time equivalent employees and offer group health plans, the primary administrative task you’ll need to worry about is following notice procedures. In some cases, your plan administrator will take on the responsibility for providing notices to participants. COBRA notices include:

  1. Summary Plan Description (SPD): This document describes COBRA rights provided under the plan, such as what benefits are available, the rights of participants and beneficiaries, and how the plan works. ERISA requires group health plans to give each participant a SPD within 90 days after becoming a plan participant.
  2. General Notice: The COBRA general notice describes the rights of employees and their spouses and must be provided within the first 90 days of coverage. Group health plans can satisfy this  requirement if the SPD includes the general notice. A model notice can be found on the Department of Labor’s site.
  3. Qualifying Event Notice: If a qualifying event occurs, you may need to notify the health plan that an employee is eligible. As an employer, you’re only required to notify your plan if you’ve terminated or reduced the hours of an employee, the employee passed away, or they became eligible for Medicare. Otherwise, for example, in the case of divorce, it is up to the employee or qualified beneficiary to notify the plan.
  4. Election Notice: After the plan receives notice of a qualifying event, it must provide the qualified beneficiary an election notice within 14 days that describes their rights to continuation coverage as well as how to make an election. Again, the DOL has a model election notice on its site.
  5. Unavailability of Continuation of Coverage Notice: When a group health plan denies a request for continuation coverage or extension request, the plan must give the denied individual a notice of unavailability of continuation coverage within 14 days of receipt of the request.
  6. Early Termination of Coverage Notice: If continuation coverage is terminating early, such as when premiums aren’t paid in full on a timely basis or the participant begins coverage under another group health plan, you need to give the beneficiary a notice of early termination as soon as practicable after you make the decision.

In addition to notice rules, you’ll also need to provide qualified beneficiaries an election period – a certain amount of time to allow them to decide if they’re going to opt into continuation coverage. This period has to be at least 60 days from the date of the qualifying event or when the election notice was provided – whichever is later.

Lastly, you’ll need to ensure you continue to offer the exact same coverage as what’s currently available under the plan to other similar employees. That means beneficiaries need to have the same benefits, choices and services. Likewise, employees are subject to the same rules for things like co-pays.

Can I handle COBRA myself?

As you can see, there are a lot of details and deadlines to keep track of for compliant COBRA administration. While you may choose to take on these tasks yourself, many companies choose to outsource COBRA administration to a third party administrator (TPA). A TPA can:

  • Keep track of COBRA processes and timeframes
  • Limit your liability since TPAs typically assume financial responsibility for their errors (but not yours) 
  • Minimize costs of in-house resources such as IT
  • Provide a buffer between former workers and your company
  • Free you up to focus on more strategic activities

What’s included in Complete Payroll Solutions’ COBRA administration?

If you decide to outsource COBRA administration, Complete Payroll Solutions is a TPA who can help. We have decades of experience handling the following tasks for clients:

  • Eligibility: We handle processing eligibility with the carriers.
  • Notice distribution: Our system automatically provides all current federal and state continuation COBRA notices and updates, as necessary.
  • Elections: We offer both online or paper elections for those eligible.
  • Premium collection and processing: With Complete Payroll Solutions as your COBRA administrator, employees can pay by debit or credit card or by automatic ACH.
  • Web-based reporting: We offer a website for reports that employees and employers can access.
  • Support: We offer both web and phone support for you and your employees.
  • Compliance: We provide regulatory updates and assist with compliance.

How much does Complete Payroll Solutions’ service cost?

For our full-service approach to COBRA that we just described, Complete Payroll Solutions charges a one-time initial set-up fee of $150 and $350 per year for administration. That cost is the same no matter how many employees you have or who are COBRA eligible.

How to Best Manage COBRA Administration

COBRA rules and requirements can be complicated. To mitigate your risk of non-compliance and costly penalties, a TPA is a good option to ensure you understand – and meet – your requirements.

As you evaluate TPAs, Complete Payroll Solutions may be a good fit for you if you:

  • have 1 or more COBRA-eligible employees
  • want an experienced team with decades of COBRA administration experience
  • prefer one-on-one, live support from an assigned client relations specialist instead of automated help

Think our COBRA administration services may be a good choice for your business? Visit our pricing page to learn more.

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