COBRA Features

Companies that maintain group health plans are required to offer employees and their dependents continuation of coverage at group rates, which the employee would otherwise have forfeited due to qualifying events such as termination, reduction of work hours, divorce, and so on. This requirement is known as COBRA. The act applies to companies with more than 20 employees.

Companies are also required to provide certification to qualified employees that confirms previous coverage, limits preexisting conditions exclusions, provides special enrollment rights to specified employees and dependents, and prohibits discrimination in plan enrollment and premiums. This requirement is known as Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The Benefits COBRA administration feature enables companies to maintain control of their own programs in compliance with federal and state regulations.

Employees who leave the company might be entitled to COBRA coverage. Their dependents and beneficiaries might also be entitled to this coverage. Plan administrators are required to notify each qualified beneficiary who is entitled to elect continuation coverage. The regulations permit a single election notice that is provided to multiple qualified beneficiaries who are part of a single-family unit if they reside at the same address, based on the current information available to the plan. Specific notices must be provided to qualified beneficiaries in the event that the administrator terminates a period of continuation coverage before the end of its maximum duration. Specific notices must also be provided to qualified beneficiaries in the event that the administrator determines that a qualified beneficiary is no longer eligible to receive continuation coverage, as in the case of a dependent that comes of age. You process claims and benefits for COBRA participants in the same way that you process claims for employees who are enrolled in the same plans.

You can track the dates on which a qualified beneficiary is eligible for COBRA, elections, and payment dates. You use COBRA notification history to track pertinent information for each of the notices that you send. You can also enter additional information for all qualified beneficiaries.

After you enroll qualified beneficiaries, you can run a variety of COBRA reports to review the COBRA coverage that the qualified beneficiary has chosen, as well as all additional information that has been entered regarding the beneficiary.

This guide is not a replacement for the federal and state requirements. You should be familiar with the regulations and mandates provided by COBRA to implement and maintain the COBRA coverage benefits. For current legislative information about COBRA administration, contact the regional or district office of the Pension and Welfare Benefits Administration for the U.S. Department of Labor.