Understanding COBRA Setup
Before you can use any features of the COBRA administration system, you must verify that settings in the Plan Master program (P08320) are activated for COBRA. On the Plan Master form, verify that the COBRA Plan option is selected for the plans that are available for COBRA coverage. Then, on the U.S. Legislative/Regulatory form, verify that the Valid for Cobra option is selected for all DBAs that are used for COBRA administration. Verify that the Description 02 column in user-defined code (UDC) 06/PF contains the number of pay periods for each pay frequency. A blank value in this column produces incorrect COBRA premium amounts.
When setting up COBRA, you need to define critical information that the system uses for processing:
COBRA general constants
COBRA qualifying event constants
COBRA qualifying event rules
COBRA legislation allows state, county, and local (city) tax authorities to overrule federal provisions regarding COBRA benefits, provided that the changes represent an increase in the level of benefits that is offered. The system uses residential tax area information as the basis for benefits. The residential tax area information code is a code that identifies a geographical location and the tax authorities for the employee's residence. This code is synonymous with GeoCode.
A GeoCode is a nine-digit code that represents a taxing jurisdiction. All GeoCodes are defined and maintained by Vertex. Each GeoCode has the following format:
XXYYYZZZZ
where
XX equals state
YYY equals county
ZZZZ equals city
When choosing the residential tax area information to use as the basis of calculation for benefits, the system searches first for a match on the city, county, and state. If it finds such a match, the system ends the search and uses the tax information that is associated with the designated city as the basis of calculation for benefits. If it does not find a match, the system then searches for a match on just the county and state, and so on.
After the system establishes a match within the hierarchy of the residential tax area, it begins another search to determine whether the company has increased the level of benefits that are offered at the company level or the home business unit. The system searches first for a match on both the company and home business unit. If it finds a match, the system uses the home business unit information to establish the level of benefits. If it does not find a match, the system searches for information at the company level only. The system uses the highest level of benefits that were recorded by searching first through the qualifying event constants and then through the general constants information as a basis of calculation.
For current legislative information regarding COBRA administration, contact the regional or district office of the Pension and Welfare Benefits Administration for the U.S. Department of Labor.