COBRA has been a federal law for more than 30 years, but it remains a challenge for many employers. While the basic rules may seem simple, it's a complex law that's hard to manage.
Because COBRA has been a law for so long, it has become an afterthought for a lot of employers. But a new wave of lawsuits has put COBRA front and center again. Lawsuits coupled with fines and penalties means mismanaging COBRA can be very costly.
With so much at risk, you should consider outsourcing your COBRA program.
There are a lot of reasons why you should outsource COBRA administration. Here's our top three:
Administering COBRA requires serious resources. There's so much to learn and then you have to stay up to date. Not to mention the administrative processes:
Complying with COBRA is challenging. And the burden of compliance rests with the employer. With potential lawsuits and fines for mistakes, there's a lot at stake.
If time is money, managing COBRA is very expensive. There's so much to do, and it's often left to someone who is already stretched thin. Spending time managing COBRA means other tasks get set aside. That loss in productivity juts adds to the cost. There’s also the hidden cost of COBRA to worry about.
We've designed our COBRA administration services to do all three. Once you notify us of COBRA-related events, we do the rest. We then send you the info you need to update your records and track your program.
Most employers know that it takes a lot of time and effort to manage COBRA. And many employers know there's huge financial risk if they make mistakes. But few employers realize there's a very real hidden cost to COBRA.
So, what's the hidden cost?
Studies have shown that coverage for COBRA participants costs more than active employees. That's because they tend to have more claims, at a higher cost, than active employees.
Failure to manage COBRA processes and deadlines can result in extra participants. For example, failing to apply payment deadlines means people stay on COBRA longer than they should. When people stay on COBRA longer, they have more claims.
These extra claims can result in higher premiums at renewal. And higher premiums mean everyone pays more for coverage.
Choosing UnifyHR for COBRA administration can help reduce this hidden cost. That's because we protect your plan from covering people when they're not eligible.
Many FSA and HSA vendors offer COBRA administration. But they offer it as a secondary service. Why do they do it? They do it because the market makes them think they must. But it's not their profit center and it's not where they focus. And because it's not their focus, the experience for employers and participants is often lacking.
How does the market drive this behavior? Employers suffer from something known as "vendor fatigue." It's what happens when they have to manage too many vendors. To combat this, employers do their best to combine services with a single vendor.
But how do employers decide which vendors to combine? For some reason, it became common for employers to insist on a single vendor for FSA and COBRA. There is no natural overlap between the two. They are very different services that need two different sets of data. But still, employers insist.
Employers who choose a single vendor to provide both are often surprised to find things are still separate. Two separate implementation processes and teams. Two different file feeds. Two different account management teams. Sometimes the invoice is the only combined item, but even that's not always the case.
COBRA is a core offering for UnifyHR. We know what it takes to create a great experience for employers and participants. And we do it every day.
Call us biased, but we think employers should always choose the best vendor for each service. It's a foolproof way to ensure the best possible experience for both the employer and their participants.
A large, multi-national manufacturing company grew frustrated with their COBRA program. Their chosen vendor struggled to manage the employer’s complex subsidy program.
The program contains stacked rules, based on location, years of service, plan enrollment, and other factors. Due to the complexity, the employer had to manage everything by spreadsheet themselves.
After reviewing other options, they switched to UnifyHR. They chose us because of our advanced severance and subsidy capabilities.
Within a few weeks we built a matrix that captured the multiple layers of the employer’s subsidy rules. There's more than 2,500 in all. Their entire program is now automated and running smoothly.
A nationwide provider of health care services offers an “extended medical” program to retirees. The program is offered alongside COBRA, and subsidies are available based on years of service.
Because we handle ACA and COBRA for this employer, we’re able to automate the entire process, including the subsidy calculations. It also allows us to handle the employer’s reduction in hours program. Under the program, some employees can keep their medical coverage after the reduction while continuing their dental and vision coverage through COBRA.
And our flexible data policies make it easy for the employer. They use existing exports from multiple systems to send us their data. We handle everything, and their IT team doesn’t have to program to our specs.