7 Vital Criteria for Hiring a COBRA Administrator

Few people know what the acronym COBRA actually stands for, but most know basically what it does.  From Wikipedia:  The Consolidated Omnibus Budget Reconciliation Act of 1985 (or COBRA) is a law passed by the U.S. Congress on a reconciliation basis and signed by President Ronald Reagan that, among other things, mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment.

Some might assume that overseeing an employer’s COBRA program just involves HR shuffling a few pieces of paper and saying bye-bye to the departing employees. There are actually many complex management facets involved, including calendar dates, payment schedules, events, eligibility, beneficiaries and much more.

When hiring a COBRA benefits administrator, it is very important to consider the following issues:

Experience. Determine how long the administrator has been handling COBRA benefit programs and for whom.

Benefits. Exactly which company benefits can be administered to COBRA participants?

Open enrollment. What benefits are covered during open enrollment? Is the administrator familiar with the policies of ensuring COBRA participants can maintain the same rights as active employees?

Tracking. How does the administrator monitor and track time frames?

Reporting. Will the administrator provide reports that can be used for auditing COBRA participants and insurance bills?

Liability clause. Obtain assurance from the administrator that guarantees and upholds all fiduciary responsibility.

Department of Labor (DOL) audits. Has the administrator ever been involved in a DOL audit or lawsuit? If so, what was the outcome?

 Additional considerations:

•    How is monthly billing and collection monitored?
•    Are online payment options available for COBRA participants?
•   Can specific time frames be easily tracked (e.g., 60-day election period, 45-day initial       premium payment period or 30-day grace period)?
•   Is online access available for the employer and participant?
•   Are call centers provided to support employer and participant issues?

Since overall responsibility for COBRA compliance remains with the employer, it is essential to hire an experienced and knowledgeable COBRA administrator who can manage all aspects of the program. Choosing inadequate administrators can result in having to cough up big fines for overlooking regulations or making other mistakes.

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