Also see the Client Alert Section
for more information
If your company is subject to COBRA, it is critical that you are aware of your responsibilities as an employer. An Employer is subject to COBRA if it employed 20 or more employees for over 50% of the preceding calendar year. All employees must be counted. Part time employees are counted as a fraction of an employee equivalent to the fraction of time they work compared to that of a regular full time employee.
Note that New Jersey Employers that are not subject to COBRA Laws should review the NJ State Continuation Regulation. (Information Provided under Helpful Links)
DOL COBRA Homepage
Provides a detailed overview of the major provisions of COBRA
Frequently Asked Questions under COBRA
10 Myths about COBRA Administration, and why you need an expert
to handle your COBRA Administration
- COBRA Administration is relatively straightforward.
enacted in 1986 and has been amended 12 times since then. These
amendments required changes to content of the COBRA letters and
added new required letters. If you have not changed your COBRA
letter to comply with the amendment changes chances are you are out
MYTH #2 –
It is acceptable to give a newly enrolled employee their Initial
Notice of COBRA Rights via interoffice mail.
is critical that covered dependents understand their COBRA Rights
upon enrollment, as opposed to when coverage ends. If you are
not sending this notice to the employees home and addressing it to
all covered members chances are you are out of compliance. In
addition, children living at a different address must also receive
MYTH #3 –
Only Medical, Dental and Vision Coverage are subject to COBRA.
– HRA Plans are considered COBRA qualifying plans as are FSA plans.
There are certain IRS approved ways to calculate the HRA COBRA
Premium. FSA is a COBRA qualifying event if the employee has a
positive balance. If you are mishandling this you are out of
MYTH #4 –
It is safe to send the COBRA Offer Letter to the person’s address on
the enrollment form.
Necessarily – You must use the person’s last known address.
It is therefore critical that address changes given to one
department are given to all departments and if someone else handles
your COBRA administration it is critical that they are given the
MYTH #5 –
A person who is on COBRA and subsequently qualifies for Social
Security Disability will always be eligible for the additional 11
months of COBRA.
– There are specific time frames within which a person must meet the
SS Disability definition in order to qualify for the additional
#6 – If the employee is not harmed by a mistake made administering
COBRA, there is no penalty.
there have been a number of lawsuits won by employees who were not
financially harmed by COBRA administration errors. These lawsuits
resulted in significant financial penalties paid by the employer.
MYTH #7 –
A COBRA participant may be terminated if payment is not made by the
end of the grace period.
False – A
COBRA participant must mail their payment by the end of the
grace period. So you must allow for mail time before terminating
someone. It is advisable to keep the envelope to prove payment was
not mailed in a timely fashion.
MYTH #8 –
I have no obligation to my COBRA participants at Open Enrollment.
COBRA participants must be treated as any other similarly situated
employee. This means they get every health plan option that an
active employee gets and must be provided with all the required
paperwork, including SBC’s and rates.
#9 – My COBRA offer letter is clear on how Medicare eligibility and
interaction between Medicare and COBRA is complex and often
misunderstood. A person on COBRA who subsequently becomes eligible
for Medicare loses all COBRA rights, including Dental and Vision
coverage even though these benefits are not covered under Medicare.
An employee already on Medicare who becomes COBRA eligible may
elect COBRA, but needs to know that COBRA becomes the secondary
coverage to Medicare.
– My broker or consultant handles my COBRA Administration so I don’t
have to worry. I have a COBRA administrator handling my COBRA
Administration so I don’t have to worry.
COBRA is an employer law and it is ultimately your responsibility to
ensure that COBRA administration is done properly. If you have an
expert handling your COBRA – you have put
yourself in the best position for COBRA compliance. This
means that you must be able to rely on their advice, expertise and
knowledge in this very tricky field. You must have
communication with them to ensure that you understand the timing
within which you must notify them of COBRA events and situations
where COBRA may or may not apply.
Lawsuits and COBRA Audits are happening more frequently. If you
have concerns regarding your compliance in this area, please contact