How can companies limit their COBRA exposure?
The IRS has determined that over 90 percent of employers are currently non-compliant with the administration of COBRA (The Consolidated Omnibus Budget Reconciliation Act). Paycom released an infographic designed to help employers better understand the new COBRA audit guidelines, the exhaustive list of documentation needed to prove compliance and the penalties of non-compliance.
Every company with 20 or more employees that provides group health benefits is subject to COBRA. Proper administration can include up to 25 different written notices including Initial Notices for all qualified beneficiaries that enroll in health benefits and Election Notices that are triggered by a variety of qualifying events. COBRA not only requires processes for notifying beneficiaries but also tracking and documenting all aspects of compliance.
With only ten percent of employers in compliance with COBRA, many employers who think they are covered because their insurance company, broker or third-party administrator is handling their COBRA administration is likely at risk. According to the staggering number of recent court cases related to COBRA, the employer, not the insurance company, is the liable party. Outsourcing to a proven COBRA administrator who stays current with COBRA rules and guidelines and can automate the compliance process, reduces exposure and helps to ensure employers are compliant and COBRA audit ready.
Paycom is one of the largest COBRA administrators in the U.S. and offers one of the only single-application solutions for Payroll and HR with automated COBRA compliance. Because of their unique single application technology, COBRA compliance is much easier and eliminates the duplicate efforts required when maintaining employee data in multiple systems. When a user of Paycom adds a health care deduction for an employee or enters a COBRA qualifying event like an employee termination, the system automatically prompts the user to send the required correspondence.
“We find that our customers don’t have the time or resources to manage all the steps needed to remain COBRA compliant,” said Brad Richardson, vice president of operations for Paycom. “We keep up on all the latest changes in the law, send the notices and letters, keep records, receive the health insurance premium payments, reconcile payments on a daily basis and send monthly statements detailing all the activity, giving our customers the assurance they are COBRA compliant.”