The Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") became law on April 7, 1986. Both the IRS and the U.S. Department of Labor share in the administration and enforcement of COBRA.

COBRA mandates that employers offer terminated employees (and their qualified dependents) the ability to temporarily maintain their current group benefits by self-paying the monthly premiums.

Exceptions to COBRA include: (1) Employers with fewer than 20 employees with group benefits (although states such as California and others have implemented their own versions of COBRA); (2) Government employers (federal and state); (3) Church plans; and (4) Employers with benefits that do not satisfy the "group" plan definition for COBRA purposes.

Generally, COBRA benefits are available for up to 18 months for qualified employees, their spouses and dependents if the qualifying event is due to the employee’s termination or reduction of employment. An extension is available for up to a total of 29 months for employees that are disabled at any time during the first 60 days of COBRA coverage. This also applies to the disabled employee’s non-disabled qualified beneficiaries. Coverage for up to 36 months is available for spouses and dependents of a qualified employee facing a loss of employer-provided coverage due to an employee’s death, divorce or legal separation, or certain other "qualifying events."

Additionally, The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires that participants in group health plans be given a "Certificate of Creditable Coverage" when they lose an employer's health care plan. In sum, the "old" group health plan must provide the certificate to participants losing coverage so they can present the certificate to a new employer's plan to reduce any preexisting exclusion period. This is becoming increasingly important as medical groups terminate their relationships with HMOs. Under an HMO, preexisting conditions are not a factor in accepting new employee-participants whereas PPOs may exclude treatment for prior medical problems.

Trust Administrator's portfolio of COBRA and HIPAA administrative services enable clients to outsource all the functions associated with their COBRA-HIPAA program. TAI's services include notification to beneficiaries, premium billing, tracking and remittance to the carriers. It's a "turn-key" system.

Employers receive accurate and up-to-date monthly reports. Employees are able to contact us electronically and via a toll free number. The COBRA-HIPAA rules can be complicated and stressful, particularly when dealing with disgruntled employees and their spouses. To compound matters, employers face costly litigation from former employees and government agencies in the event the COBRA-HIPAA rules are not followed.

For additional information, contact us about our COBRA-HIPAA outsourcing services.