There’s a lot to think about during the annual open enrollment period. There’s so much, in fact, that it’s easy to forget important tasks, like notifying COBRA participants. Whether you’re a third party administrator, or an employer, remember to include these individuals in the open enrollment process.
Out of Sight, Out of Mind
It’s hard to forget about the people you see every day. Your active employees are there, receiving notices, asking questions and turning in paperwork for open enrollment. But what about your COBRA participants?
COBRA participants are entitled to coverage that is identical to the coverage of active employee plan participants. This normally means that COBRA participants keep the coverage they had before a qualifying event.
However, if multiple plan options are available during open enrollment, COBRA participants should be given the same choices as active employees. COBRA participants also need to be alerted when plans are being eliminated or the rate is changing during open enrollment. In other words, COBRA participants need to be notified of open enrollment procedures along with active employees.
What the Law Requires
According to the Department of Labor: Qualified beneficiaries must be offered coverage identical to that available to similarly situated beneficiaries who are not receiving COBRA coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation coverage). A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. Qualified beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.
There is a slight variance on interpretation of these regulations though. Some employers only allow COBRA participants to change benefits/plans/coverage levels of a type of plan they already have. For example, someone who didn’t elect or dropped dental cannot re-enroll in it later. However, a more widely accepted direction taken by many employers is that COBRA participants CAN enroll in benefits they previously did not have since that is what actives can do.
A COBRA compliance rule of thumb is: The COBRA law dictates the MINIMUM that you must do for compliance. if you extend your hand beyond the law’s minimum, you usually won’t get in trouble, if you consistently apply your practices to all COBRA continuants on the plan.
The Price of Forgetfulness
Employers that forget to communicate open enrollment options to COBRA participants could be dealing with a major headache in terms of paperwork later. The company may be charged hefty fines, as well.
But it gets worse. Failure to provide COBRA participants with necessary notification also leaves a company open to legal action, including expensive lawsuits.
Prevent Problems and Avoid Fines
A small mistake can lead to big problems, so it’s smart to take a moment to double check your policies. Third party administrators – now is the time to check in with clients. Employers – double-check your procedures to ensure everyone was properly notified. If COBRA participants were neglected during open enrollment, you’ll need to rectify the oversight immediately.
This is just one issue that can arise when administering COBRA and open enrollment. To learn more about managing successful open enrollments, download the Open Enrollment Best Practices and Underutilized Features guide today.