Do you trust your COBRA administrator? This is an important question because as health insurance rates have skyrocketed, so too has the liability associated with COBRA administration. The ACA removed limits from policies, and in doing so, lifted the lid on potential COBRA errors as well. Remember, COBRA is compliance at its heart and the regulatory penalties which may be levied by the Department of Labor are significant. The insurance claims which COBRA participants might incur can be even more dangerous to the health plan than the penalties.
So, it’s important to choose your COBRA administrator carefully and to monitor your administrator’s work. Be selective. Any person with access to a computer can attempt to administer COBRA for their company or for someone else’s.
The Top 10 Requirements
Below you’ll find some criteria to consider as you assess the quality and competency of your COBRA administration options. These questions can help you find a new partner or to affirm that you already have the right professional by your side
- Experience in COBRA Administration. This attribute is pretty straight forward and worth a look. How many years has the administrator been handling COBRA for others? How many notices do they send each year?
- COBRA Credentials. Is COBRA their primary business? How many employees on their team are dedicated to COBRA administration? Who are their clients? Do they offer a standard contract?
- Professional Liability Insurance (E&O). Does the COBRA administrator have errors and omissions insurance to protect you and their other clients in case they make an error? This is important. Ask them for their policy limit and related deductible.
- Cyber Liability Insurance. Make sure you ask the potential COBRA administrator if they have cyber coverage. Identity theft is becoming more of an issue each day and it is likely that the administrator uses an online system which someone else owns.
- HIPAA Compliance. Does the COBRA administrator maintain ongoing HIPAA training for their associates each year? Have you reviewed their Business Associate Agreement (BAA)?
- Premium Collection & Remittance. Does the COBRA administrator have a written Premium Collection and Remittance Policy? Are they willing to share it with you? How well do they manage Premium Collection? Can they verify that they receive funds into a separate trust account? What is their remittance schedule?
- Continuing Education. Does the COBRA administrator offer Continuing Education for brokers and/or clients? Are they students of the business? Do they review their COBRA notices each year?
- Communication. How well do they communicate with COBRA participants, insurance carriers and clients?
- Solid References. Can they give you references from clients of similar size in your field? Not all employers do COBRA exactly the same way. Are their clients satisfied with their performance?
- Great Systems. Can the COBRA administrator prove to you that their systems are world class? Will their other clients attest to this? We’re well into the digital age and it is more important than ever that systems are fast, secure, reliable, and capable of producing bullet-proof record keeping. Remember, in a COBRA dispute the one with the best records usually prevails.
Take a look at the list and feel free to add other criteria to suit your selection needs. Choosing a COBRA administrator can be challenging. However, if you assess your options objectively, with an eye on the criteria above, you will improve the odds of having a great partnership for years to come. COBRA administration is a complex endeavor and should be taken seriously. The ACA has made COBRA administration even more difficult and choosing the right partner is more important than ever. As always, do your best!
This article was reprinted from the January/February 2019 issue of America’s Benefit Specialist Magazine featuring our very own Robert Meyers.