Welcome to the COBRA Cure!

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1 Welcome to the COBRA Cure! Presented by Stephanie Cohen & Frank Surface Hosted by Lerch, Early & Brewer, Chtd.

2 PPACA and COBRA Nothing Changes Except Letter content and emphasis Medicare issues remain Exchange Options HIPAA Events Rate differences / subsidies Small Groups 2

3 Please read the information contained in this notice very carefully. This notice contains important information about your right to continue your health care coverage in the Sample group insurance plans (collectively referred to as "the Plan"), as well as other health coverage alternatives that may be available to you through the Health Insurance Marketplace. 3

4 COBRA Continuation Coverage To elect COBRA continuation coverage, follow the instructions on the next page to complete the enclosed Election Form and submit it to us. If you do not elect COBRA continuation coverage, your coverage under the Plan will end on (Last Date Covered) due to: ~ End of employment ~ Reduction in hours ~ Death of employee ~ Divorce or legal separation ~ Entitlement to Medicare ~ Loss of dependent child status 4

5 PPACA and COBRA There may be other coverage options for you and your family. When key parts of the health care law take effect, you'll be able to buy coverage through the Health Insurance Marketplace with an effective date beginning on January 1, In the Marketplace, you could be eligible for a new kind of tax credit that lowers your monthly premiums right away, and you can see what your premium, deductibles, and out-of-pocket costs will be before you make a decision to enroll. Being eligible for COBRA does not limit your eligibility for coverage for a tax credit through the Marketplace. Additional, you may qualify for a special enrollment opportunity for another group health plan for which you are eligible (such as a spouse's plan), even if the plan generally does not accept late enrollees, if you request enrollment within 30 days. 5

6 HIPAA New Hire Recommendation 6

7 Definitions Plan Sponsor Carrier Billing Cycle COBRA Payment Cycle Enrollment into COBRA Payment Options Plan Options 7

8 Qualifying Events & Maximum Time Frame Under COBRA Termination of Employment ~ except for gross misconduct (18 month maximum) Reduction in Work Hours (18 month maximum) Death of Employee (36 month maximum) Divorce or Legal Separation of An Employee (36 month maximum or State Rules) 8

9 Time Frame Under COBRA Employee Becomes Entitled to Medicare (36 month maximum) Loss of Dependent Status (36 month maximum) Employer Bankruptcy as it relates to retiree plans only (lifetime) 9

10 ELIGIBLE QUALIFIERS 1) Was one of the listed qualifying events experienced? If not, COBRA should not be offered. 2) Will there be a loss of group coverage (defined as the person ceases to be covered under the same terms and conditions as in effect immediately before the qualifying event ) within the maximum time frames (18, 29 or 36 months)? If not, COBRA should not be offered. 3) Is the person a qualified beneficiary? If not, COBRA should not be offered. 10

11 ELIGIBLE QUALIFIERS continued In the past, a person who experienced a Qualifying Event and had coverage from another source (i.e. Medicare or other group coverage), the employer did not have to offer COBRA continuation. A Supreme Court ruling has changed the law so that COBRA must be offered to any Qualifiers, regardless of other coverage enforce at the time of the Qualifying Event. 11

12 COBRA Notifications Initial COBRA Notification All Employees and covered Dependents shall be sent an initial COBRA notification letter stating their rights under the law. As new Employees are hired and enroll in one of the group plans, the Employee shall be sent the COBRA General Notice explaining their rights. 12

13 COBRA Notifications Qualifying Event Notification There are seven Qualifying Events that require the Administrator to send a Qualifying Event Notification (or Election Notice). Four of the events require the Administrator to automatically send a letter upon realization of the event; the other qualifying events require the employee/dependent to notify the Administrator. 13

14 Qualifying Event Notification Termination of Employment, Reduction in Work Hours, Employees Death or Company Bankruptcy - When one of these events occur, the Employee and any covered Dependents shall be sent a COBRA Qualifying Event Letter which explains their rights under the law. The letter should be sent to the last known address within forty-four (44) days from the Qualifying Event date or date coverage is to be terminated. This letter should be updated to reflect any changes in the law or court decisions pertaining to the law. 14

15 COBRA Notifications Conversion Privilege Notification The third notification required by law is the conversion to an individual plan notification. If available to active employees, COBRA Participants shall be offered the right to continue under a conversion (individual) plan per the guidelines set forth by the associated Insurer. 15

16 COBRA Notifications continued Certificate of Coverage With the passage of the Health Insurance Portability and Accountability Act of 1996, the Administrator will provide a Certificate of Coverage to individuals (both as a Qualifier and Participant) that experience a loss of coverage from any or all of the Company's group plans. The Certificate of Coverage will detail the individual's coverage start and completion dates. 16

17 COBRA Notifications continued Unavailability of COBRA Notification In the event, the Plan Administrator is informed of a qualifying event but not in a timely fashion or is deemed ineligible for continuation coverage, the person shall be sent the Unavailability of COBRA notice. The May 2004 final regulations mandate the creation of this notice so the requesting person does not assume he/she has coverage when in actuality does not. 17

18 COBRA Notifications continued Early Termination from COBRA Notification The May 2004 final regulations require Plan Administrators to notify COBRA Participants when their COBRA coverage is being terminated prior to the end of the COBRA term. In the event of termination for nonpayment of premiums, voluntary terminations or other reasons whereby the Plan Administrator is removing a person early, they shall be sent a termination of COBRA letter detailing when and why coverage is being terminated prior to the end of the term. 18

19 COBRA Notifications continued Proof of Mailing is Required In the past, employers needed only to prove they had procedures to place the appropriate notification in the mail. A recent court case [Crotty v. Dakotacare Administrative Services, Inc., 2006 WL (8th Cir., Aug. 1, 2006)] found an Administrator in noncompliance because they could not prove the letter was sent. 19

20 Qualifier's Notification of COBRA Acceptance Qualified Beneficiaries have sixty (60) days from the later of the date of the qualifying event letter or the date benefits are terminated to inform the Plan Administrator of their desire to continue coverage. (The sixty day time frame start date has really never been defined. Does it start from the date the notice was sent or the date received by the Qualified Beneficiary?) 20

21 PREMIUM PAYMENTS Monthly Premiums COBRA Participants shall be charge the group rate (the amount charged by the Insurer for a similarly situated active Employee) plus an administration charge (2% of premiums). COBRA Premiums shall not be changed at times other than the annual insurance renewal, a change in Dependents or if a Participant is determined by Social Security Administration to be "Disabled." 21

22 Premium Payments continued Premium Due Date COBRA Participants must make timely premium payments to continue under the Company's group plan(s). There are two (2) different grace periods that shall be offered to COBRA Participants prior to termination from any plan. Initial Grace Period 45 Days from Acceptance Date Regular Grace Period End of the month of coverage 22

23 Premium Payments continued In the event a Participant's premium is short by an "insignificant amount," a notice will be sent requiring the additional premium or the Plan Administrator may deem the payment as paid-in-full. (10%) The Company will use the postmark date as the determination if a payment is made in a timely fashion. 23

24 Coverage Under COBRA If the Company elects to change plans and/or benefits, COBRA Participants would be eligible to enroll in the changed plan, therefore receiving identical benefits as a similarly situated active Employee. If a plan has deductibles and coinsurance maximums, a new determination (i.e. amounts satisfying deductible and coinsurance maximums) will be made based upon expenses incurred prior to the Qualifying Event of only family members continuing under the plan. 24

25 Coverage Under COBRA continued COBRA Participants that move from the plan's service area may lose coverage under the group plan (as would a similarly situated active employee). If the organization offers a plan that would provide coverage in the new area, the COBRA Participant should be offered the right to enroll in the new plan. 25

26 Coverage Under COBRA continued The law states that a COBRA Participant may be terminated from a plan upon receiving other coverage. It should be understood that if an individual was enrolled on a plan (i.e. Medicare) prior to their COBRA election, they shall still have the right to continue coverage under COBRA. 26

27 OPEN ENROLLMENT COBRA Participants are offered the same rights as similarly situated active Employees during Open Enrollment. They may change plans and add/delete eligible Dependents. Although part of the family unit, Dependents added during Open Enrollment will not have the same COBRA rights as the initial Qualified Beneficiaries (unless the Dependent is a child born or adopted). 27

28 Disabled COBRA Participants Qualified Beneficiaries that experienced either a Termination of Employment or Reduction in Work Hours and who are disabled prior to the first sixty days under COBRA shall be offered an eleven (11) month extension (or 29 total months). Participants shall be required to provide Social Security's Determination of Disability within 60 days from the date of notification and prior to the end of the 18 month COBRA term. Both the disabled COBRA Participant and his/her Dependents on the plan will be eligible for the eleven (11) month extension. 28

29 MULTIPLE QUALIFYING EVENTS The thirty-six months will commence from the Employee's original Qualifying Event date. It is the responsibility of the Dependent to notify the Administrator of the Qualifying Event within sixty (60) days of the event. (If a termination of employment follows a Reduction in Work Hours, the maximum time frame offered for COBRA continuation coverage shall be eighteen months). 29

30 Termination from COBRA Plan Termination Nonpayment of Premium Coverage under another plan Medicare Entitlement Carrier Service Area for cause End of COBRA Term 30

31 COBRA Documentation The Administrator will document every Qualifying Event, Qualified Beneficiaries electing COBRA, selected plans and premium payments. Reports will be completed on a monthly basis, filed and maintained for a minimum of seven (7) years. Files shall be maintained for all Qualified Beneficiaries and will include copies of all COBRA-related notifications, applications and election notices. 31

32 GOLDEN & COHEN Stephanie Cohen, CEO Founded in 1992 One of the top-rated employee benefits consulting companies in the DC- Metropolitan area More than 2,000 group and individual clients locally A division of NFP, a National organization of more than 140 offices across the country with more than 2,000 benefits professionals, representing over 40,000 corporate clients ( Our years in this business combined with the resources of NFP, we are able to bring together leading-edge thinking, preferred carrier relationships, best-of-breed products, advanced benchmarking and analysis tools, and comprehensive decision and implementation support services to meet the needs of your continually evolving workforce.

33 MoneyWise Solutions Frank Surface, Principal Founded MoneyWise Solutions and focused on COBRA Administration and support of independent benefit brokers in the eastern U.S. Now, MWS serves over 450 brokers and 1,200 clients with benefits and COBRA Administration and Benefit Support services. MoneyWise also provides Applicant Tracking Systems, Section 125 Administration, and HR representation support for Wage and Hour and EEOC Claims including OFCCP Affirmative Action Plan preparation and Audits.