COBRA: Save Yourself The Headache, Use A PEOs’ HR Services.
Source: SOI Blog
To many small business owners and managers the title Consolidated Omnibus Budget Reconciliation Act of 1986 is as ominous as its acronym, COBRA. And it is with just cause owing to complexity, compliance liability, administrative costs, frequent adjustments, differences between states, and the direct interface with employees on the matter. PEOs help charm employers out of the COBRA pit without the bite of cost or stress.
Raymond A. Parker, SPHR, Senior Vice President – Human Resource Consulting with SOI, a leading U.S. professional employer organization (PEO), suggests that “The devil is in the details with COBRA. It can be a valuable, helpful and effective benefit for employees; however, fully understanding it, applying it ‘by the numbers’ and dealing with its many aspects can take an employer’s eye off effective functioning of the business. PEOs can soothe the issue and be the ‘snake charmer with a flute to tame COBRA’. Managing the program is a step-by-step activity requiring precise timing, knowledge of exactly what to do, accurate documentation, and stringent compliance. Such activities are what PEOs are known for today.”
It is commonly known that COBRA provides temporary continuation of group health coverage for employees and their families who would otherwise lose coverage because of termination of employment, death, divorce, or other life events. Employees who are covered by a group health plan qualify for continuation of healthcare. But then the snake pit begins to deepen with questions of when coverage begins, what benefits are covered, what are the notice requirements, how long coverage last under varying circumstances, what it costs employers and employees, etc. Managing COBRA effectively takes knowledge, skill and ability as well as readily available tools and practices. PEO professionals have at hand and have learned to use COBRA continuation coverage checklists, information needed to comply with COBRA checklists, record keeping compliance checklists, gross misconduct policy checklists, notice to qualified beneficiaries guides, qualifying events notices, and more.
Federal law and most state laws require continuation of group coverage at employees’ own expense or permit employees to convert individual plans. Federal continuation provisions apply in all states. Yet employees may opt for protection of state law if such is more favorable to them. Federal provisions apply to all group health plans. State provisions apply only to plans paying benefits out of an insurance policy. Self-insured plans are not covered by state continuation and conversion requirements. Continuation periods may vary depending on the qualifying event. Dependents losing coverage may qualify for continuation on their own.
It is almost too much for a non-professional benefits administrator to fathom. PEOs handle it as a matter of course and thus leave employers to do what they do best—perform their core business responsibilities. Contact us today for a free comparison quote.
SOI is a leading professional employer organization (PEO) for small and medium-sized businesses (SMBs) serving as a trusted partner in integrated human resource (HR) compliance, employment practice liability, risk management, employee benefits, and payroll processing. SOI is based in Charlotte, NC and supports tens of thousands of worksite employees throughout the U.S. For more details, review our services.