COBRA

COBRA
COBRA administration can be a significant drain on your internal resources. Factor in the consequences of non-compliance, and it’s easy to understand why employers turn to NueSynergy to manage this burdensome administrative task.
 

HOW WE CAN HELP

The COBRA administration specialists at NueSynergy will generate and mail the required notifications following the initial notice, as well as track, document and update all COBRA-related events. We also provide and maintain the necessary documentation to respond to an Internal Revenue Service audit of your COBRA practices.

The law identifies four distinct groups who are COBRA eligible.

  1. Employees and their families who lose coverage because of a covered employee’s termination or reduction in hours
  2. Dependent children who lose coverage once they exceed the plan’s age limit for eligibility
  3. Spouses and dependent children who lose coverage as a result of divorce, legal separation or death of a covered employee
  4. Spouses and dependent children who lose group coverage because the covered employee became entitled to Medicare

In certain cases involving bankruptcy of the employer, COBRA coverage may even be available for retired employees, their spouses and dependent children.

ELIGIBLE INDIVIDUALS
  1. Be enrolled in a group health plan whose sponsoring employer has over 20 employees; 
  2. Experience a qualifying event;  
  3. Or must be a qualified beneficiary of the person experiencing the qualifying event.
QUALIFIED BENEFICIARIES
Anyone covered under a group health plan on the day before an event that causes loss of coverage including:
  • Participanting employees, including part-time employees
  • Their spouses
  • Their dependents
  • Retirees (unless they are eligible for Medicare)
  • Partners in a partnership
NON-ELIGIBLE INDIVIDUALS
  • An employee who is not yet eligible for your group health plan
  • An eligible employee who declined to participate in your group health plan
  • An individual who is enrolled for benefits under Medicare

Ref. United State Department of Labor

 

COBRA COMPLIANCE

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

 

ELIGIBLE BENEFITS

Healthcare Plans         Medical Spending Accounts     |     Dental Plans     |      Vision Plans    

Hearing Plans     |     Prescription Drug Plans     |     Alcohol & Substance Abuse Plans     |      Mental Health Plans

 

NON-ELIGIBLE BENEFITS

Life insurance     |      Disability insurance     |      Retirement plans     |      Vacation plans

 

COMMUNICATION & TIMING

New Hires

Covered employees and covered spouses must be notified of their initial COBRA rights when they first join the plan.

COBRA Event

Covered individuals must be notified of their election rights to continue coverage after a qualifying event occurs.

Communication

Employers have 30 days to notify the plan administrator (NueSynergy) when a loss occurs for any of the reasons listed above, except for divorce and change of status by a dependent. In those two instances, you have 60 days to notify the administrator. NueSynergy then has 14 days after notice from the Employer to notify the person who is entitled to COBRA coverage.

QUALIFYING EVENTS

These are events that cause an individual to lose their group health coverage. The type of qualifying event determines who the qualified beneficiaries are and the period of time that a plan must offer continuation coverage.

Qualifying events for covered employees if they cause the covered employee to lose coverage:

  • Termination of the employee's employment for any reason other than gross misconduct; or
  • Reduction in the number of hours of employment.

Qualifying events for a spouse and/or dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:

  • Termination of the covered employee's employment for any reason other than gross misconduct;
  • Reduction in the hours worked by the covered employee;
  • Covered employee becomes entitled to Medicare;
  • Divorce or legal separation of the spouse from the covered employee; or
  • Death of the covered employee.

Qualifying event for a dependent child of a covered employee if it causes the child to lose coverage:

  • Loss of dependent child status under the plan rules. Under the Patient Protection and Affordable Care Act, plans that offer coverage to children on their parents' plan must make the coverage available until the adult child reaches the age of 26.

 

PAYMENT AMOUNT

The amount a COBRA participant or their qualified beneficiaries are charged will not exceed the total costs paid by the employee and the employer, plus an additional 2 percent for administrative costs. The COBRA participant is typically responsible for paying the costs associated with COBRA continuation coverage.

 

PAYMENT TIMELINE

When electing continuation coverage, the COBRA participant is not required to send any payment with their election form. They are required, however, to make an initial premium payment to NueSynergy within 45 days after the date of their COBRA election (that is the mail date on the election form, if using first-class mail). Failure to make any payment within that period of time could cause the COBRA participant to lose all COBRA rights. 

 

PAYMENT METHOD

NueSynergy will send a payment booklet with set premium due dates for the remaining months within the plan year. The COBRA participant will make their monthly premium payments by mailing a check or online with a credit card.

 

COBRA RENEWAL

When the current group plan renews, an open enrollment notice with new plan rates and new payment book is sent to the COBRA participant should they choose to remain on COBRA continuation coverage.

Note: Some employers may subsidize or pay the entire cost of health coverage, including COBRA coverage, for terminating employees and their families as part of a severance agreement. If you are receiving this type of severance benefit, talk to your plan administrator about how this impacts your COBRA coverage or your special enrollment rights.

 

Resources

FAQs

Form 1099-SA notifies the IRS of distributions made from your HSA during the tax year. Form 5498-SA notifies the IRS of contributions made to your HSA during the tax year. These forms will be available electronically for your NueSynergy HSA and can be found online under "Tax Forms" within the "My HSA" section.

• Change in legal marital status (marriage, death of spouse, divorce, legal separation, annulment)
• Change in number of tax dependents (birth, death of dependent, adoption or placement for adoption)
• Change in dependent’s eligibility
• Change in employment status of employee, spouse or dependents
• Other changes that may permit an election change under the Dependent Care FSA are:

     ○ Change of dependent care provider
     ○ Change of rate charged by unrelated dependent care provider
     ○ Child attaining age 13

Election changes must be consistent with the event. If you experience a Change in Status, please review your Summary Plan Description, as it will provide you with important information on the deadline for reporting this event.

If year-to-date contributions exceed the amount of reimbursements and there is a remaining balance, the employee has a COBRA election available for the remainder of the plan year. If they do not elect COBRA, then expenses can only be submitted up to the end of their termination run-out period after which and funds remaining would be forfeited.

COBRA, which stands for “Consolidated Omnibus Budget Reconciliation Act,” is a federal law that requires group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated due to certain specific “qualifying events.”

COBRA requires continuation coverage to be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage would otherwise be lost COBRA is often more expensive than the amount that active employees are required to pay for group health coverage since the employer usually pays part of the cost of employees' coverage and all of that cost can be charged to individuals receiving continuation coverage.

The law generally applies to all group health plans maintained by private-sector employers with 20 or more employees, or by state or local governments. The law does not apply to plans sponsored by the Federal Government or by churches and certain church-related organizations.

In addition, many states have “state continuation” laws similar to COBRA, including those that apply to health insurers of employers with less than 20 employees (sometimes called mini-COBRA). Check with your state insurance commissioner's office to see if such coverage is available to you.

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To see a complete Eligible Expenses Chart please go to the following link.

See All Eligible Expenses

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