Benefits Outsourcing 101: COBRA Administration
June 8, 2018
Jill Garrison
Timer  Read Time: 4 minutes

As one of the most cumbersome administrative processes facing HR teams, it’s no surprise that COBRA is the #1 outsourced benefits service. In fact, more than 60% of organizations outsource COBRA administration.

Why Outsource COBRA?

There are actually several compelling reasons to partner with an experienced COBRA provider:

 Tedious Administration

Let’s face it, COBRA is an administrative nightmare. Not only are HR teams charged with monitoring eligibility, timelines and coverage, but also actively communicating COBRA notices and updates throughout the lifetime of the COBRA recipient. Outsourcing this process will lessen the burden on your HR teams and give them time to focus on more pressing internal activities, like employee recruitment and engagement.

Expedite Communication

Timing is everything when it comes to COBRA. The sooner you can send out COBRA notices, the sooner former employees can enroll and the sooner your requirements will be fulfilled. Former employees have a 60-day window to accept or decline coverage and an extra 45 days to pay the insurance premiums. Outsourcing COBRA with an experienced and tech-savvy provider will expedite communications, ensuring election notices and other time-sensitive disclosures are sent out in an efficient manner.

 Risk Mitigation

The cost of non-compliance with intricate COBRA regulations is steep. COBRA is enforced by the Internal Revenue Service (IRS) and the Department of Labor (DOL). Non-compliance can be enforced by both organizations and fines can exceed $100 per day of non-compliance, depending on the severity of the infraction. This can quickly add up, as was the case for the large financial company that agreed to pay $300,000 in a settled COBRA case. Mitigate this risk by outsourcing COBRA activities to an experienced third party.

Uncomfortable Interactions

Managing and administering COBRA can be… uncomfortable. You will be dealing with an employee who either quit, was fired or was laid off. Dealing directly with ex-employees in any situation can be awkward. Sometimes, it makes more sense to avoid potentially tense interactions and let a non-involved third party handle personnel communications.

 No Direct Impact On Bottom Line

Providing COBRA benefits is a requirement, not a choice. While maintaining compliance is certainly a priority, managing COBRA benefits offers little to no direct impact on your company’s bottom line (outside of avoiding penalties). In-house administration can be time-consuming and costly. Often, offloading these administrative tasks can help your HR team focus on more impactful tasks, like employee recruitment and retention.

What Does COBRA Outsourcing Include?

PlanSource can handle the full cycle of COBRA administrative responsibilities for you. This starts with generating and communicating initial and qualifying event notices so you don’t have to worry about staying compliant or being subject to penalties. We will audit participants for accuracy using employee data from the PlanSource Benefits Administration System and assume full premium collection, monthly remittance, eligibility management for COBRA participants and issue resolution with the carriers on your behalf.

Send Notices

Generate notices based on qualifying events

Process Payments

Process elections and payments from beneficiaries

Reinstate Coverage

Add COBRA coverage and manage eligibility timeline

Bill Enrollees

Bill enrollees and provide reporting and auditing

Answer Questions

Address any questions with our contact center

Manage OE

Handle open enrollment and all future notice requirements

Don’t forget to view our complete benefits outsourcing guide for more information about benefits outsourcing statistics and best practices!

Interested In Outsourcing COBRA?

Contact PlanSource today for a risk-free discovery session. We’ll chat about your current pain points and discuss how outsourcing can help!

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