COBRA Deadlines are Complex, Full of Traps for the Unwary

A Memo from Wanda Bishop

COBRA requires negotiating a thicket of deadlines. They’re easy to forget and the penalties for missing them can be costly.

Wanda Bishop

For the beneficiary, usually a departing employee, the risk is losing the health insurance coverage that’s provided under COBRA. For the employer, the risk is a penalty that adds up at a rate of $110 per event per day.

Let’s review the major requirements.

It all starts with a triggering event. Those include termination, reduction of hours, death of a covered employee or an employee’s Medicare entitlement. The employer then has 30 days to notify Savers Admin.

We then have 14 days to send the COBRA election packet to the qualified beneficiary. In practice, we normally get it out within 48 hours.

The packet contains about 10 pages of very detailed information, telling the beneficiary all that he or she needs to know to take advantage of the benefit.

After the date we mail the packet, the beneficiary has 60 days in which to return the COBRA election in writing. That secures coverage, provided the beneficiary pays the required premium in full.

The beneficiary can take as long as 45 days after returning the election form to pay, but it’s important to remember that coverage doesn’t resume until full payment is received, from the date of the triggering event forward.

If a departing employee waits 60 days to elect COBRA, then another 45 days to make the first payment, they’ll have to come up with three or four months’ premiums to complete their COBRA enrollment so coverage can be reinstated. That can be a hardship for some people.

That’s why we advise beneficiaries to return their initial payment when they submit their COBRA election. That way coverage can resume immediately and then pay monthly premiums as they go instead of one large premium right before the deadline.

The good news here for employers is that if we handle your COBRA administration, you have only one deadline – to notify us of a triggering event within 30 days. Our system will calculate all the subsequent dates and requirements, send the notices and collect the payments.

Our mission is to keep you compliant and safe from those costly penalties. Let Savers take care of counting the days for you.

To discuss your COBRA needs please email me, Wanda Bishop or call 800-949-0311.

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Read our full April 2018 issue of The Administrator newsletter.