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TO
THE RESCUE: elaws
- Health Benefits Advisor
The
Department of Labor (DOL), as of third quarter 2003, has launched the "elaws
- Health Benefits Advisor" web site to help employers deal with the
complexities of laws (like COBRA, HIPAA, etc.), dealing with Group Health
benefits. Please click onto the following link to learn more:
http://www.dol.gov/elaws/ebsa/health/
NEW DOL REPORTING & DISCLOSURE GUIDE INCLUDES COBRA
INFORMATION
The U.S. Department of Labor (DOL) issued a reporting and
disclosure guide for employee benefit plans on November 20, 2003. The guide
assists employers, plan sponsors, service providers and other plan officials in
meeting their obligations under the Employee Retirement Income Security Act (ERISA).
For the first time, the guide includes information on documents that group
health plans must provide to participants, including those covered under the
Consolidated Omnibus Budget & Reconciliation Act (COBRA). Documents of
particular interest to COBRA administrators are listed below.
-
Initial (or general) COBRA Notice
-
COBRA Election Notice
-
Summary Plan Description
-
Summary of Material Modification
-
Certificate of Creditable Coverage
-
Medical Child Support Order
-
National Medical Support Notice
The Reporting and Disclosure Guide for Employee Benefit Plans is
available from the DOL by calling 866-444-3272 or on the web at:
www.dol.gov/ebsa/pdf/rdguide.pdf.
COBRA,
and Cal-COBRA, mainly address the rights of employees and their
dependents to continue employer sponsored Group Health Insurance Benefits
following termination and/or other "Qualifying Events". The difference
between the two has to do with slightly differing responsibilities of the
employer, where the federal Law applies to employer groups of 20+, and Cal-COBRA
to smaller sized groups of 2-19 employees. Federal COBRA requires the employer
to provide not only the initial Notice of COBRA Rights, but also the Election
Notice and premium collection functions, whereas Cal-COBRA transfers the latter
requirements to the Insurer.
California
also offers additional extensions beyond the typical 18 months of COBRA for
subscribers and legally married spouses, however, the following conditions
apply:
-
subscriber
has worked for the employer at least 5 years prior to termination
-
is
60 years old or older on date employment ends, but still under age 65
-
subscriber
is entitled to and elects COBRA, Cal-COBRA
-
subscriber
is not covered under any other group plan not maintained by the employer
or former employer even if that coverage is of lesser value
Additionally,
California Insurers offer what is referred to as "California
Continuation COBRA" for former employees and their dependents,
including divorced or surviving spouses, that can continue COBRA coverage for up
to 5 continuous years upon exhaustion of COBRA or Cal-COBRA, and regardless of
the age or length of employment of the subscriber; however, premiums are higher
with the extended coverage (as much as 213% higher). The following
conditions apply:
It
is the employers responsibility to notify qualifying subscribers 90 days prior
to the end of COBRA benefits, and the employee then has 30 calendar days prior
to the date that COBRA or Cal-COBRA ends, to notify the Insurer of their
intention to enroll, at which time most Insurers would take over the
responsibility for the billing and collection of premiums. The following
"termination conditions" apply:
-
member
reaches age 65
-
member
becomes covered under another group health plan
-
member
becomes eligible for Medicare
-
former
employer terminates its contract with the same Insurer
-
member
fails to pay premiums as billed
-
the
spouse or surviving spouse exhausts their 5 continuous years of
"California Continuation COBRA"
Assembly Bill 1401 - Extends COBRA &
Cal-COBRA Coverage
Assembly Bill 1401 was signed into law September 2002 making changes to the
length of COBRA and Cal-COBRA coverage, California Conversion Plans, HIPAA
Continuation of Coverage rules, and to the State's MRMIP Program.
One item in particular that should receive special
attention…AB1401 will require plans and insurers to offer health benefit
coverage to certain individuals. The bill, would revise coverage requirements
for converted policies and would also require a health care service plan and a
health insurer to offer specified individuals who begin receiving continuation
coverage on or after January 1, 2003, and who have exhausted their continuation
coverage under federal continuation coverage provisions, an opportunity to extend
the term of their coverage to 36 months. The bill would also extend continuation
coverage for specified individuals under Cal-COBRA to 36 months.
To view AB 1401 in its entirety, please
CLICK
HERE:
TAA - The Federal Trade
Assistance Act & COBRA Premium Subsidy Tax Credit
TAA applies to companies subject
to COBRA provisions that have experienced a reduction in work force due to the
impact of foreign import trade. These employers may have employees eligible for
the COBRA premium subsidy tax credit. The Department of Labor (DOL)
determines eligibility.
Highlights of TAA provisions:
- COBRA subsidy allows a tax
credit for 65 percent of COBRA premiums. Applies to employees experiencing
job loss or reduction of hours, or who are between 55 and 64 and receive
monthly benefits from the Pension Benefit Guaranty Corporation (PBGC).
- Eligible coverage months for
claiming the credit begin no earlier than 90 days after August 6, 2002.
Other interpretations outline an effective date of the first month following
90 days from August 6, 2002.
- A new 60-day election period
for COBRA was added.
- The election period also
applies to individuals who did not previously elect COBRA coverage and were
determined eligible for the tax credit provisions.
- The period between the loss
of coverage and the beginning of the 60-day election period would not count
against the HIPAA 63-day gap in coverage rule and protects an eligible
individual from pre-existing condition exclusions.
- Components of TAA include the
opportunity to elect if a previous election was not made and the capability
to receive credit if an election has been made.
HIPAA
(the Health Insurance Portability & Accountability Act),
another such Law that followed COBRA Law in 1996, is a further "expansion
of COBRA"; however, it deals mainly with the issue of portability of health
coverage (i.e. the ability of an insured who has exhausted COBRA extended
benefits, to then be able to obtain replacement non-Group coverage, but on a
guaranteed issue basis, and regardless of negative health history).
The
following link opens a PDF file covering the Federal COBRA Law as provided by the US Dept.
of Labor. You will need Acrobat Reader 3.0, or higher, to read this file
(click HERE
first to download a free copy of Adobe Acrobat Reader that reads all PDF
files).
US
DEPARTMENT OF LABOR - COBRA FILE
COBRA & HIPAA Laws are
subject to regular amendments; therefore, for the most up to date information
please contact the following:
Overview of HIPAA and
COBRA, see IRS Notice 98-12, available on the IRS home page at:
http://www.irs.gov
Many employers are unaware of their total responsibilities under this Act, and
therefore often find themselves out of legal compliance. For example, what is required of the Employer in a COBRA Notification?
The US Dept. of Labor generally includes at least the following.
Contents Within a Typical Employer COBRA Notice:
Note
that upon hire, an employee must be given a Notice informing them that they have
COBRA rights, and they must be given another Notice & Election Form upon a
"Qualifying Event" (QE). Understanding what is, and what is not
a "QE", and that these can be caused not only by employees but also by
changes in circumstances among their dependents, is critical to understanding
and controlling employer liabilities caused by compliance violations and
oversight surrounding COBRA matters.
-
First and Last Names of all
"Qualified Parties" (employee and dependents).
-
Date of
"Qualifying Event" (these can be caused by the actions of
employees as well as their dependents).
-
End of Qualifying Date
[(usually 18 months, or 36 months for dependents, and can be 29 months or
longer if disabled at time of QE) assuming no lapse due to non payment of
premiums].
-
Election Form - Plan benefits available (acceptance or declination-initial)
* Medical , Dental, Vision, Life, etc.
* Cost of each plan - Employers Contribution is 0% -Vs- what it was; Employee's Cost
is now 100% -Vs- what it was, and may also include an added Administrative
Fee (max
amount is 2% under Federal COBRA, or 10% under Cal-COBRA).
-
Payment Due Date each Month (detailed mailing and contact info for
timely payment).
-
Election Due Date
-
Coverage may be cancelled if payment not rec'd by _______
Date_____.
-
Plan design or plan changes
if any (provide copy of plans employee handbook)
-
Signature by
employee accepting or declining coverage and date.
LeagueFinancial.com partners with
several third party COBRA Administrators to manage COBRA compliance for its
clients. We have found that the added costs are well worth the savings in
rather substantial fines and penalties that, more often than not, most employers
incur due to lack of a complete understanding of COBRA compliance issues.
[NOTE:
This information is intended as a guide and as general information , is not
definitive, and is f or illustrative purposes only.
The information contained herein is not intended to be used as a replacement to the
Law, to any legal forms, or to any legislative and/or other requirements.]
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