Three COBRA Premium Collection Requirements Your COBRA Software Should Have
One of the biggest shortfalls of many COBRA software systems is secure COBRA premium collection. It's essential for every employer to have error-proof methodology for handing:
- The secure collection of COBRA premiums
- Accurate accounting of COBRA participant payments
- Precise and timely distribution of COBRA payments on each participant's behalf
COBRA Guidelines for Premium Collection:
- Any money collected from COBRA participants must be kept in a separate account from other corporate funds (Remember: It's the participants' money - not the company's money.)
- Never mingle individual plan assets with company operating assets.
- Ideally, COBRA payments should be received by a bank, using a secure lock box to avoid any potential ethical issues.
COBRA Guidelines for Premium Accounting:
- Each participant's COBRA money should be segregated.
- You need to know each participant's balance at any given time.
- Ideally, the collection and accounting systems should be integrated in the COBRA software system so when the money is received or a payment is made, the participant's account balance is instantly updated.
COBRA Guidelines for Premium Distribution and Problem Resolution:
- When COBRA payments are received, they need to be paid to the appropriate insurance carriers on a timely basis.
- If an issue arises, the COBRA software should raise a red flag and facilitate resolution. For example, if a participant writes the wrong amount on his check and is $50 short, he must be notified immediately, so he has time to resolve the issue by sending the appropriate amount before the grace period ends.
As you can see, COBRA premium collection is a task not be taken lightly. It's an area that small businesses often manage incorrectly exposing them to fines for COBRA non-compliance. When selecting a COBRA software, make sure that the software has COBRA collection, accounting and distribution capabilities.
And in case you're wondering ... YES! COBRAGuard manages these tasks on your behalf, making COBRA premium collection easier than you ever thought possible!