Health insurance coverage for employees is complicated. Currently, under Obamacare, companies with at least 50 employees need to provide coverage. States, meanwhile, may have their respective rules. Overall, businesses with 20 employees or more may have to provide COBRA.
What Is COBRA?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act, a federal law enacted in 1986. With it, employees gain the right to continue their insurance coverage and receive benefits they may otherwise have lost once they are no longer connected to the company.
There are many events that can trigger thew administration of COBRA. These include layoffs, voluntary job loss, divorce, an employee’s death, and reduced working hours. The experts at Proview Global also add that those who may no longer be covered by their parents’ health insurance can also qualify for COBRA. A job loss resulting from gross misconduct is not part of the qualification.
COBRA can cover not only the employees but also their immediate family and dependents. Those who use Medicare and do not qualify for the group health plan are excluded.
This coverage does not last forever. It can be good for 18 to 36 months, depending on the triggered event. It could be because the burden of communication and costs are quite high. Employees pay the full cost of the coverage, which can be up to 102% to 150% of the premium cost, the excess of which may pay for administrative charges.
Moreover, employers bear the brunt of communicating the coverage timely. You need to notify the administrator, who is usually the insurance company, about the triggered event within 30 to 60 days depending on the reason, after which you have to inform the employee about the notice within 14 days. Employees have only 60 days from the notice to inform the employer if they would take advantage of the coverage.
As a company, you should not take COBRA lightly especially when penalties can be stiff, but you also cannot afford to compromise other HR functions. To save you the hassle, consider outsourcing COBRA administration.