With our economy ever in flux, it’s not unusual for a small business to be juggling several COBRA participants at any given time. As your HR department has probably surmised by now, communicating with former employees and retirees is not the easiest task - and getting them to make their COBRA payments in a timely manner can be especially time consuming.
As COBRA participants navigate their new circumstances, money is frequently an issue, and it’s not uncommon for COBRA participants to put off making their payments until the very last day of their grace periods. In order to make sure your HR team doesn’t spend an excessive amount of time managing your COBRA program, implement these four COBRA guidelines in-house:
- Provide your COBRA participants with regular, monthly invoices that clearly communicate both the amount due, and the 30 day grace period end-date. Invoices can be sent via US mail or email. A well-documented paper trail is key to avoid future COBRA disputes, and with the litany of changes right around the corner due to the Patient Protection and Affordable Care Act (PPACA), makes documentation more important than ever.
- Do NOT accept late payments. If your HR office has been in the habit of doing so, make sure COBRA participants understand that this new COBRA guideline will be strictly enforced. It’s important that COBRA participants realize that there is NO post-grace period grace period, and that in order to maintain their health insurance benefits, they will have to make their payments by the date indicated on their monthly invoices. People are used to having a little cushion to fall back on after payment deadlines, but it’s crucial that your HR team gets the message across to all participants that this is not the case with COBRA.
- Send payment reminders throughout the month via email, text, letter, phone, or automated message. While not mandatory, a friendly COBRA payment reminder will go a long way towards preventing payment laggers from waiting until the very last day of their grace period to pay their premiums, or missing their payment altogether. You can also use this opportunity to remind participants that late payments will not be accepted.
- Expand your payment options to include ACH and credit card payments in addition to the traditional methods of payment. Your small business should already have a separate bank account for accepting COBRA premiums, but were you aware that your HR department can also set up an attached merchant account or PayPal account in order to make electronic payments even easier? Have your administrative team talk to COBRA participants about setting up a recurring automatic payment on a specific date each month. Every member that chooses to do so represents countless hours your HR team won’t have to spend chasing down COBRA payments every month. If you plan to pass on any fees associated with these new payment options on to COBRA members, be explicit about this in your new COBRA guidelines.
If your small business can successfully implement and enforce these four COBRA guidelines, it will greatly streamline COBRA administration and alleviate frustrating payment issues and disputes.
If you haven’t outsourced your COBRA administration yet, now is the time to explore your options. With the added challenge of PPACA compliance, most HR teams welcome the relief of outsourcing COBRA administration. To further explore the option, download our free report – “In Search of ROO (Return on Outsourcing).”