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COBRA Premiums - Change
Benefits & Compensation
COBRA Premiums - Change
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Just joined a company that did not allow COBRA participants to enroll during annual period (7/1/08 to 6/30/08). Rates in use by COBRA vendor we not correct for participants until we discoved in Octobe
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Forums » Topic Forums » Benefits & Compensation » COBRA Premiums - Change
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COBRA Premiums - Change
posted at 4/20/2009 7:12 AM EDT
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Posts: 2
First: 4/20/2009 Last: 4/20/2009 |
Just joined a company that did not allow COBRA participants to enroll during annual period (7/1/08 to 6/30/08). Rates in use by COBRA vendor we not correct for participants until we discoved in October 08. Vendor failed to correct rates as we learned in December 08; vendor corrected rates in December 08 for all future COBRA participants. Given COBRA requires rates to be same as similarly situated non-COBRA participants, we felt most prudent to implement actuarially calculated rates upon discovery of error by vendor. Now, being told since vendor did not actually correct rates until December 2008, rates are locked in for 12 months. Cannot find this in any of Code or other reference info.
Does anyone know if this action locks rates in for 12 months since an administrative correction? Our next OE is coming up in June for next plan year (7/1/09 to 6/30/10). Our ERISA counsel not the lightest buld. Thank you. |
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COBRA Premiums - Change
posted at 4/20/2009 8:17 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
Sounds like you need to get a new COBRA vendor more than anything. The rates are not locked in for 12 months. The rates are based on what active employees pay. If you have an upcoming open enrollment on 7/1, then COBRA participants will be eligible to make changes at the new rates plau 2%. Not to throw one other wrench in here, but don't forget about the new COBRA subsidy. |
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COBRA Premiums - Change
posted at 4/20/2009 10:14 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I'd also seek legal counsel on the fallout of not allowing COBRA individuals to elect/participate. The penalty fees can get rather large but usually the DOL is happier if the company tries to correct this issue when it is found.
How far off are the difference in rates? If anything, I would go forward prospectively rather than try to retroactively change the current participants COBRA premiums. And I would try to see if the COBRA administration company has E&O (errors and omissions) insurance. |
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COBRA Premiums - Change
posted at 4/29/2009 6:19 AM EDT
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Posts: 35
First: 8/3/2004 Last: 6/20/2011 |
"COBRA premiums may be increased if the costs to the plan increase but generally must be fixed in advance of each 12-month premium cycle. "
This was taken directly from the DOL website. Regarding the problem with your Cobra Administrator, if the difference in the old rate versus the new rate they should have been charging is significant I would contact them and let them know that they are responsible for paying the difference due to their error. If you have experienced other problems with them I would definitely look for another administrator. |
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COBRA Premiums - Change
posted at 4/29/2009 7:57 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
The key word in that passage is "generally". As with most statutes, they are open to interpretation. In the case of an error in billing, I would find it hard to imagine that the DOL would be cracking down on the employer. |
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