What is COBRA?

A federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), allows certain individuals to continue their group health plan coverage at their own expense when that coverage otherwise would end because of a life event known as a “qualifying event.” After a qualifying event, COBRA coverage must be offered to each person who is a “qualified beneficiary.” If COBRA coverage is elected, the employee will receive the same coverage as active employees who have coverage under your group health plan. Employees on COBRA will have the same rights that active employees have, including open enrollment and special enrollment rights.

What constitutes a qualifying event?

An employee will experience a “qualifying event” if work hours are reduced or employment ends for any reason other than gross misconduct. An employee’s spouse will have a qualifying event if they divorce, and an employee’s dependent will have a qualifying event if he or she ages off to qualify for coverage.

What types of health plans are subject to COBRA?

All group health plans are subject to COBRA. These include medical, dental, vision, prescription drugs, Health Flexible Spending Accounts, and Employee Assistance Plans.

How long does COBRA coverage last?

COBRA coverage can last for either 18 or 36 months depending on the qualifying event. If the qualifying event is a reduction in work hours or the end of employment, COBRA coverage will last for up to 18 months. If the qualifying event is the employee’s death, enrollment in Medicare (Part A, Part B, or both), a divorce or legal separation, or a dependent child aging off the group health plan, then COBRA coverage will last for up to 36 months.

How does P&A administer COBRA coverage?

Since COBRA is a federally regulated law, there are certain time guidelines that we must adhere to. Once you notify P&A of any employees who are eligible for COBRA coverage, we will send the employee the required explanation of rights, election forms and, if applicable, insurance application forms. If COBRA coverage is elected, we will enroll the employee and manage their COBRA coverage by sending monthly bills. Employees are notified that COBRA premiums are to be paid on time in order to keep coverage in effect.

Is my client required to offer COBRA?

Church and federal government health plans are exempt from COBRA. If this exemption does not apply to your client, it may be required to offer COBRA. In the previous calendar year, if a company employed 20 or more workers on more than 50% of the typical business day, then it must offer COBRA. All employees must be counted even if they do not participate in the group health coverage. Any part-time employees must be counted on a pro-rata basis. The following individuals are not counted: self-employed, independent contractors, or directors. Please note that some states have “mini-laws” about COBRA that need to be recognized.

What services will P&A provide?

Once P&A assumes the responsibility of managing COBRA on your client’s behalf, we will provide them with a COBRA procedures manual that will also include forms for their use. To ensure the company is compliant with COBRA regulations, P&A will mail out blanket Initial COBRA Notices to all employees if desired. The Initial Notices will be sent via first class mail to the homes of the employees, explaining their rights and responsibilities under COBRA. After a qualifying event occurs and we receive notification about the affected employee (Qualified Beneficiary), you can expect the following services to commence:

1. P&A will mail out a COBRA election package to that Qualified Beneficiary that will consist of the required explanation of rights, election forms, and applicable insurance forms. Once the Qualified Beneficiary elects coverage and returns the required documents back to P&A along with his or her first COBRA premium payment, P&A will enroll the Qualified Beneficiary in COBRA with the Coverage Provider.

2. P&A will continue to send monthly bills to the COBRA Continuant for the premiums due each month of elected coverage. If payment is not received by the first of each month as outlined in bill, P&A will send a second bill in the form of a Late Notice approximately the 15th of each month. If payment for that month is not received or postmarked by the end of the month, we will notify the Coverage Provider to cancel the COBRA Continuant’s coverage for non-payment and it will not be reinstated. We will then notify the COBRA Continuant in writing of this cancellation in coverage.

3. P&A will collect premium payments and remit 100% of the applicable premium back to the company so that it can pay the Coverage Provider. If your client elects to have P&A pay the carriers directly, we will collect the COBRA premiums and remit payment to the appropriate Coverage Providers.

4. P&A will receive and review any qualifying event notification to determine if it has been made in a timely manner and if it meets the criteria for qualifying events under COBRA regulations. We will also review any request by a COBRA Continuant to extend his or her period of COBRA coverage due to a determination of disability by the Social Security Administration or the occurrence of a second qualifying event. If the request is timely and if it is determined the request will be granted, P&A will notify the Coverage Provider(s) who have been providing coverage to the COBRA Continuant. If, however, it is determined there is no right to COBRA coverage or an extension of COBRA coverage, P&A will provide written notice to the affected individuals that COBRA coverage is not available.

5. P&A will notify the COBRA Continuant should a Coverage Provider modify his or her COBRA coverage in any material. We will also provide a notice describing whatever rights he or she may have under COBRA to coverage under a “conversion health plan” before a COBRA Continuant’s coverage ceases. If COBRA coverage under the group health plan should terminate for any reason and the Coverage Provider does not provide a certification of creditable coverage, P&A will do so for the COBRA Continuant.

6. P&A will regularly communicate with your client to keep them abreast of their COBRA Continuants, notifying them when their obligation to provide COBRA coverage will cease and to coordinate with their open enrollment during the term of the COBRA Continuant’s coverage, forwarding to the appropriate Coverage Provider information describing any change in coverage elected by the COBRA Continuant.

How easy is it to submit COBRA files?

Flexibility for our clients is a top priority. We have created many ways to receive COBRA files and paperwork from your client. We have designed a web submission tool that notifies us of qualifying events or initial events. You will receive electronic verification that we have received your request within minutes of sending and then a second verification when the notice has been completed at P&A. Your client’s electronic verification will include a reference log number and a notes section to inform us of any unusual circumstances. We are also able to receive files on a secure FTP site or electronically via an Excel spreadsheet. If paper is your client’s choice medium, we have a dedicated secure fax line to receive COBRA-related faxes.

What type of reports will my client have access to?

There are standard reports that your client can expect to receive from P&A on a monthly basis, generally between the 10th and the 15th of each month. The COBRA Actives Report lists all current COBRA members, the benefits they are enrolled in, and their payment histories. The COBRA Notice History Report shows all COBRA notices produced by P&A by date. This report can be sorted by date range. The COBRA Receipts Report is a remittance report that lists all COBRA premiums received by P&A from each COBRA member per month. This report can also be sorted by date range.

Can my client work with P&A directly through your website?

P&A will send a login for HR Connect that can be accessed from our website. Once logged in, your client will have several options. They will be able to submit requests for COBRA notices and address changes to P&A, as well as have access to many standard reports. The Initial COBRA Notice button is for submitting a request to us to send any new hires or newly benefits-eligible employees their initial notice. The QE COBRA Notice button is for submitting a request to us to send qualifying event COBRA Notices to any eligible employees. Once your client submits this information to P&A, they will receive an automatic email with a log number for future reference, letting them know we received their request. Once the Initial Notice or QE COBRA Notice is mailed out, they will receive another email confirming this action has happened. Your client will also have access to three (3) standard COBRA reports: COBRA Notice History, COBRA Actives, and COBRA Receipts.

What options are available for employees to pay premiums?

Employees can pay their COBRA premiums with a personal check or they can set up an ACH withdrawal, which is an automatic withdrawal from their chosen bank account. They also have one-time online payment capabilities. We also offer a payment option through our IVR phone system, where employees can make a payment over the phone.   

How can an employee verify that his or her payment was received?

Through our P&A website, we have a COBRA Payment Query tool which will allow employees to check whether or not their payment has been received. Our system will provide them with an update on their payment status and history. Another option is that they may use our IVR telephone system, which will give them access to open invoices and their paid through dates.  They can also speak with our customer service department directly at (800) 688-2611.

What happens if an employee misses a COBRA premium?

COBRA premium payments must be received by the first of each month. If payment is not received at that time, P&A will send the employee a Late Notice. Late Notices are sent out approximately the 15th of each month for that month. If the payment for that month is not received or postmarked by the end of the month, the employee’s COBRA coverage will be cancelled for non-payment and cannot be reinstated.

Can an employee cancel COBRA coverage?

Yes. An employee on COBRA may cancel his or her COBRA coverage at any time. However, once it is cancelled, it cannot be reinstated. The coverage cancellation request must be submitted to P&A in writing. We require the employee’s name, his or her employer (or previous employer), and the effective date coverage is to be cancelled. The cancellation request can be submitted to P&A via mail, fax, or email.

What happens when COBRA coverage ends?

When the employee has reached the maximum period of coverage (either 18 or 36 months), his or her COBRA coverage will end. The employee may be able to convert the COBRA coverage to individual coverage with his or her current insurance carrier. Employees in this situation should contact their carrier directly to find out more about their conversion rights. Please note that state insurance rules may vary.