The company should implement and follow procedures necessary to maintain compliance with the provisions of COBRA to offer extended health insurance coverage to qualified beneficiaries who experience qualifying events. The Consolidated Budget Reconciliation Procedure COBRA identifies COBRA’s legal requirements and ensures your company’s employee or qualified beneficiary meets compliance.
All employers that provide a Group Insurance Plan, and that employ 20 or more employees (full and part-time) on at least 50 percent of its typical business days must extend an offer to continue that group insurance coverage when “qualified beneficiaries” lose coverage due to a “qualifying event”. The law does not apply to the federal government or to churches. (10 pages, 3083 words)
COBRA mandates that employers, that have twenty (20) or more employees, provide for the continuation of health care coverage/insurance from the company’s insurance benefit plan. The employee must have been enrolled in the insurance plan and then suffer a loss of health care benefits for some reason. The loss of health care benefits is usually due to termination of employment. The employee and any dependents that were covered by the health care plan are eligible for COBRA.
It is important to note that COBRA is not an insurance plan and provides no benefit or is not insurance. COBRA is the administrative tool that makes continuation of insurance available to qualified individuals. The insurance coverage available is simply a continuation of the plan that was available when the individual suffered a loss of coverage.
Consolidated Budget Reconciliation Responsibilities:
The Controller should act as the Plan Administrator responsible for overseeing COBRA requirements for compliance.
The Human Resources Manager should also be the Plan Administrator responsible for assisting employees with completing all payroll, pension and benefits forms, answers to questions about their insurance records, or interfacing with accounting regarding their payroll files and for maintaining and distributing the insurance summary plan description (SPD)
The Accounting Manager should be responsible for the receiving and applying all COBRA payments correctly.
Consolidated Budget Reconciliation Definitions:
Group health plan – a plan that provides medical benefits for the employer’s employees and their qualified dependents through insurance or other mediums, such as a trust, health maintenance organization, self funded pay-as-you-go, reimbursement, or combination of those listed. Medical benefits available to COBRA beneficiaries include all health related coverage offered in the group plan. Non-health issues offered in the group insurance plan, such as life insurance, disability, etc., are not offered under COBRA.
Covered employee – an individual who has (or had) coverage under their employer’s group health plan.
Qualified beneficiary – any other individual who, on the day before the qualifying event for that employee, is a beneficiary enrolled in the group insurance plan as a spouse, child, or other qualified dependent of the covered employee. Any child born to or placed for adoption with a covered employee during COBRA continuation coverage is automatically included in the definition of “qualified beneficiary”.
Plan administrator – plan administrator as defined in the Employee Retirement Income Security Act (ERISA).