Add COBRA administrators to a
list of businesses likely to benefit from the recession. The economic stimulus
package includes a big expansion of COBRA, the federal legislation that allows
former employees to continue coverage under employer sponsored health insurance
Former employees who choose
to continue benefits under COBRA pay 102% of the cost of coverage, they know
it’s expensive. The stimulus bill seeks to reduce individual expenses and expand
coverage by providing a 65 percent subsidy of premiums for employees who lost
their job due to a layoff for up to nine months. Employees affected by a layoff
have already been affected by a layoff who did not elect COBRA will be offered
the option to pick up the coverage under the new benefits.
There is plenty of debate
about how the potential for increased COBRA participation will affect health
plans. There is no debate that this adds an administrative burden for
employers. In addition to the new letters and descriptions of payment changes
the premium subsidy will not be paid to former employees, it is provided to
employers in the form of a tax credit.
So if you don’t already use an outside administrator for COBRA it’s a
good time to find one.
If you already use an
external payroll provider they are a good place to start your search for a
COBRA administrator. If they are not accommodating or you are not clear about
the service they will provide continue your search. Benefits brokers, business
organizations and chambers of commerce can be good sources for referrals.
Don’t rush to sign up the
first provider in a panic.
This list of questions and guidelines will help in selecting
a COBRA administrator:
liability will they assume for mistakes that they make?
communication web based? Authorized staff should be able to start the COBRA
Notice process by inputting information and changes online. Test drive the
kind of training is available for users?
do references say about the ease of use, service to COBRA participants and
customer service response?
long has the provider been in business and what are their plans for the future?
is involved in the implementation process?
is the process for distribution of premium payments collected from COBRA
Take steps now before you are
buried in a mountain of incomprehensible paperwork.