GW Human Resources provides F.U.N. Slides (Facts Understood Now Slides) on Human Resources & HR Compliance. http://gwhumanresources.com/slides/

1. on COBRA

2. Which Health Plans Are
Covered?
O Medical Plans for employers that employ 20
or more employees
O Inpatient and outpatient hospital care
O Physician care
O Surgery and other major medical benefits
O Prescription drugs
O Dental and vision care
O Life insurance is not considered "medical care,"
nor are disability benefits. COBRA does not
cover plans that provide only life insurance or
disability benefits.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 2

3. What Does COBRA Provide to
Employees?
O Continued health care coverage to
employees, former employees and/or
qualified beneficiaries after the loss of
previous coverage as a result of certain
qualifying events
O Coverage continues at the same level
provided before the qualifying event
www.GWHumanResources.com © Copyright 2016 GW Human Resources 3

4. What are “qualifying events?”
O The employer must notify the plan if the qualifying event
is:
O Termination or reduction in hours of employment of the
covered employee
O Death of the covered employee
O Covered employee's becoming entitled to Medicare
O Bankruptcy of a private-sector employer
O The employer must notify the plan within 30 days after the
event occurs.
O The covered employee or one of the qualified
beneficiaries must notify the plan if the qualifying event
is:
O Divorce
O Legal separation
O A child's loss of dependent status under the plan.
O The employee notification can be anything based on the
plan, but not shorter than 60days.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 4

5. What are the Maximum
Coverage Continuation?
O 18 months in cases involving termination
and/or a reduction in hours
O 29 months in certain cases involving
disability
O 36 months in cases involving the death of
a covered employee, or divorce
www.GWHumanResources.com © Copyright 2016 GW Human Resources 5

6. Max Grid
www.GWHumanResources.com © Copyright 2016 GW Human Resources 6
Qualifying
Event
Qualified
Beneficiaries
Maximum Period
of Coverage
Termination (for reasons other
than gross misconduct) or
reduction in hours of
employment
Employee
Spouse
Dependent Child
18 months
Employee enrollment in
Medicare
Spouse
Dependent Child
36 months
Divorce or legal separation
Spouse
Dependent Child
36 months
Death of employee
Spouse
Dependent Child
36 months
Loss of "dependent child"
status under the plan
Dependent Child 36 months

7. How Long Does a Participant
have to Elect Coverage?
O 60 days from the date of the qualifying
event or the date the election notice is
provided, whichever is later.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 7

8. Who Covers the Premium
Cost?
O The Plan can require the participant to
cover the total premium cost, including
any portion of the premium generally by
the employer on behalf of active
employees.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 8

9. When Can the Coverage Be
Cut Off?
O A participant fails to pay required
premiums
O Employer discontinues health care plan (if
changing for Open Enrollment, COBRA
must be offered with the new plan until
participant meets Coverage limit).
O Under certain circumstances where
participant obtains subsequent coverage.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 9

10. What Records Must Be
Retained?
O There are no record limits on COBRA
O However experts recommend that records
be maintained for 6 years from the date of
the record to remain consistent with
ERISA requirements.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 10

11. Required Notices
O COBRA General Notice: Notice describing
COBRA rights must be provided to
participants within 90 days after participation
in health care plan begins
O Qualifying Event Notice: Employers generally
must provide plan administrators with notice
within 30 days of the occurrence of a
qualifying event
O Plan administrator must provide participants
with an election notice of COBRA rights within
14 days of a qualifying event (44 days if the
plan administrator is also the employer)
www.GWHumanResources.com © Copyright 2016 GW Human Resources 11

12. COBRA and ACA Reporting
O Use Form 1095-C to report coverage of
COBRA participants.
O If the employer cannot obtain a Social
Security number for the Cobra participant,
the employer may report on 1095-B.
O IRS.gov provides specific guidance on
reporting terminated employees, loss of
coverage due to reduction in hours, and
an independent family member who elects
COBRA
www.GWHumanResources.com © Copyright 2016 GW Human Resources 12

13. What are the Potential Penalties?
O Monetary penalties
O ERISA Violations: Violations after 7/29/97: up to $110
per day per violation; Other judgments, costs or
damages
O IRS Violations: Nondeductible excise tax of up to $100
per day per violation for each qualifying beneficiary (i.e.,
family of four would result in an excise tax of $400 per
day) during the noncompliance period.
O Public Health Service Violation: Applicable to state and
local governments; Actions for appropriate equitable
relief
O Private Lawsuit: Employers and Plans can be liable for
payment of health care claims and fines (courts have
been known to award attorney’s fees in connection with
these suits).
O Even if a Third Party Administrator handles your COBRA
Admin, the Employer can still be liable for penalties.
(see Pierce v. Visteon Corp. - $1.8 million)
www.GWHumanResources.com © Copyright 2016 GW Human Resources 13

14. What you can do to Stay on the
Safe Side of COBRA!
O Notify all participants about ay changes in health benefits.
O Offer COBRA to all participants if a plan changes for Open
Enrollment. Either receive a waiver or track with certified mail.
O Each family member must be given a form to complete
separately in the Cobra Notice.
O Ensure notices go out on time and accurately
O COBRA liability can exist even if an individual isn’t harmed —
failing to provide a COBRA notice is enough to trigger litigation
O The clock starts running on the amount of time an employer
has to present a COBRA election notice to an employee on the
qualifying event date and not the date a clerical error is
discovered.
O Obtaining individual coverage isn’t enough to render a person
ineligible for COBRA benefits, only coverage obtained through
an employer group health plan can terminate COBRA eligibility.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 14

15. GW Human Resources &
Business Services
For more great tools, tips, guidance and
training, visit www.GWHumanResources.com
Disclaimer: Upon purchasing our product you are understanding, acknowledging and agreeing with this
disclaimer. This information is provided for general informational purposes only. GW Human Resources and
Business Services makes no warranties, express, implied or statutory, as to the adequacy, timelines,
completeness or accuracy of the information provided. The provided information does not
constitute advice and does not bind us in any way to a business-client relationship. Laws are
numerous. The amount of regulations is rising. Statements concerning legal matters should be understood
to be general observations and should not be relied upon as legal advice, which we are not authorized to
provide. Consult legal counsel to make sure that you are fully compliant.
www.GWHumanResources.com © Copyright 2016 GW Human Resources 15