Changing COBRA Administrators & Medical Carriers During COVID-19
August 31, 2020
Plan renewal season is upon us and we’re still in the COVID-19 Outbreak Period (OP), defined as the period between March 1, 2020 and a future date that is 60 days after the announced end of the national emergency caused by coronavirus. The federal government has expanded COBRA election opportunities and employers should understand these provisions, especially if they are changing COBRA administrators or medical carriers as part of their benefit plan renewal process.
What New COBRA Administrators Need to Know
If an employer plans to change COBRA administrators, the new vendor MUST receive the employer’s historical COBRA election, enrollment, and payment data back to at least the beginning of 2020. New administrators need to be aware of potential COBRA beneficiaries who are still able to elect and pay for COBRA due to the OP. There could also be individuals who previously elected COBRA, but have stopped paying their premiums during the OP. In this case, new vendors will need to know when payments have been made through.
Example: Laura worked for Granny’s Greenhouse until 5/17/2020 and became eligible for COBRA effective 6/1. Granny’s Greenhouse uses ABC Corp to administer their COBRA, however they’re moving this business to Chard Snyder effective 10/1/2020 when their plan renews. ABC Corp sent Laura her COBRA election notice, but she hasn’t elected COBRA. Chard Snyder must be aware than Laura could elect COBRA retroactive to 6/1.
Example: Stan worked for Granny’s Greenhouse until 11/22/2019 and elected COBRA effective 12/1/2019. He made premium payments through June 2020 but has now stopped making payments. When Chard Snyder takes over COBRA administration, they must be aware that Stan’s COBRA will need to be reinstated back to 7/1 if he properly makes payments as allowed by the OP delay.
COBRA & Medical Carriers
Employers changing medical carriers at renewal time need to make sure previous carriers are equipped to accept retroactive enrollments related to the OP while coverage with that carrier was active. They’ll also need to make sure new carriers are equipped to accept delayed enrollments related to the OP.
Example: Granny’s Greenhouse moved their medical from Carrier A to Carrier B effective with their 10/1 renewal. Becky worked for Granny’s Greenhouse until 7/11/2020 and became eligible for COBRA effective 8/1. Becky hasn’t elected COBRA yet due to the OP but decides to elect and pay for COBRA retroactive to 8/1 in November (assuming her extended election period due to the OP hasn’t ended).
- Carrier A needs to be equipped to reinstate Becky’s coverage for August and September
- Carrier B needs to be equipped to add Becky’s coverage starting in October
Since Granny’s Greenhouse is changing both medical carriers and COBRA administrators with their renewal, they must determine whether premium payments for coverage before 10/1 will go to ABC Corp (old COBRA vendor) or Chard Snyder (new COBRA vendor).
Example: Jen worked for Granny’s Greenhouse until 1/17/2020 and became eligible for COBRA effective 2/1. Jen elected COBRA and made timely premium payments for February, March, April, May and June, but has not made any since. Assume the OP officially ends on 12/31, which then gives Jen 30 days to make payments. On January 10, 2021 Jen makes COBRA payments for July 2020 – January 2021.
- Carrier A needs to be equipped to reinstate Jen’s coverage for July – September
- Carrier B needs to be equipped to add Jen’s coverage starting in October
Employers need to be aware of these potential issues and work with their COBRA administrators and medical carriers to make sure all necessary information has been provided to them. Preparing now will help employers and their health benefits partners prevent future complications, HR headaches, and employee frustrations.