Employers -Your Benefit Vendor Choices Matter

Recently I helped someone with his COBRA election to continue his health benefits after leaving his Fortune 500 employer. Most people don't know much about COBRA since it is expensive (102% of the total cost that was previously shared by the employer and employee) and often is not elected due to cost or going directly to another employer with benefits starting quickly. However, employers with 20+ employees are generally required by law to offer it and since individual, healthcare.gov, and even short term health insurance plans are very expensive it makes sense more of the time.

This person's employment terminated in early March and so coverage went through the end of March per that plan. However, the COBRA enrollment paperwork didn't arrive until the end of April (despite the employee calling to check on it). Employers who use a 3rd party vendor have more time to get the paperwork to the person. However the paperwork came pretty much at the absolute last possible date. If the person enrolls on time the coverage is required to be retroactive back to the first day after coverage ended (April 1 in this example). However, that means in this case where coverage for one month might have been sufficient for some of the family members the employee had to enroll & pay for April and May since coverage wasn't offered until after April had passed and reinstated in May. Since it is stressful for people who need the coverage to be in limbo in between and since each month's coverage is expensive it is a disappointing practice to wait until the end when it can be avoided. The COBRA rates on the enrollment paperwork were higher than those provided by HR upon departure and the only way to enroll was to call a phone number with an overseas call center. It was hard to navigate the unclear phone tree and get to the correct team. The representative was courteous but hadn't been trained on the basic tenets of the COBRA law. She told us the employee had to be enrolled. I kindly informed her everyone enrolled in the health plans has to be offered continuation coverage and any can enroll individually without the employee enrolling. They can each elect different coverage - medical for some, dental for one, etc. It took about an hour but we worked together and got him enrolled. No confirmation was available, nothing could be emailed. It would be another 7-10 days for a packet of information to arrive, for online registration, and even longer to pay. The coverage was reinstated in mid May. What a mess!! This was far more difficult and tedious than it needed to be. The individual told me he wouldn't have known what to do if I had not been on the call with him. This employer is using a ridiculous service likely at a significant discount but at what cost? Other vendors commonly email and mail notices and elections and payment can be made online to make this relatively easy and with inexpensive administration. Trust me you don't want to do this yourself employers! All this to say all benefits vendors and carriers are not the same. Your choices of benefit vendors do matter to your employees, your cost, and your reputation! Employers please reach out if I can recommend any benefit brokers or vendors to you! Employees in transition let me know if I can help. Here are some additional resources for employees and employers: https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra