The Top 3 Cobra Mistakes

Compliance with the complex rules regarding COBRA coverage can be difficult and mistakes can be costly. Penalties for non-compliance can include IRS excise taxes and ERISA statutory fines. See below for some of the most common mistakes benefit administrators make when it comes to COBRA:

1. Bad Timing
In the context of COBRA, paying attention to the timing of providing coverage can be crucial for reducing exposure to COBRA costs and being compliant with the rules. The duration of COBRA coverage is controlled by the COBRA statute.  Complying with these rules by providing the length of coverage required is important. At the same time, many plan sponsors want to minimize the likelihood of being responsible for large claims by COBRA QBs by only providing the minimum duration of coverage.

The period of COBRA coverage offered to QBs is known as the “maximum coverage period.” The length of the maximum coverage period depends on the type of qualifying event that has occurred. The maximum coverage period is 18 months for a termination of employment or reduction in hours and 36 months for all other qualifying events. There are situations where the maximum coverage period can be extended or terminated early.

2. No Documentation
No matter how good your COBRA compliance track record is, you can still run into trouble if you can’t prove it. Adequate documentation is important because it brings together all other elements of COBRA administration and compliance. Having thorough and accurate records will help streamline administration and support the plan in the event of a claim.

There are many different areas where documentation can help avoid COBRA compliance issues. For example, a plan’s COBRA notice information and procedures can be documented in the SPD and notice documents themselves, as well as the plan document if necessary. A plan administrator should also keep records of notices sent to and received from participants and QBs. Keeping track of payments received from QBs and made to insurers, as well as the deadlines for payments, will also assist in the proper administration of COBRA coverage.

3. Charging too Much (or not enough)

A health plan may charge COBRA QBs for the cost of providing COBRA coverage. It may require QBs to pay up to 102% of the “applicable premium” for the plan. In the case of a disability extension, it may charge up to 150% of the applicable premium for certain QBs. The applicable premium is the cost to the plan of providing coverage. For insured plans, the applicable premium is usually equal to the insurance premium paid to the insurance carrier. However, the calculation can be more difficult for self-funded plans and can be determined using past costs or an actuarial estimate of future costs. The applicable premium is the total cost to the plan for providing coverage, so it includes both employer- and employee-paid portions and can also include the administrative cost of providing COBRA coverage.

The plan must calculate the COBRA applicable premium in advance for a 12-month “determination period.” The plan can choose any 12-month period to be the determination period, but it must remain consistent every year. The COBRA premium may be changed for a new determination period if the applicable premium changes and there are certain limited situations where the COBRA premium may be changed during the determination period (for example, if the QB changes coverage to another benefit package with a higher applicable premium).

The plan administrator should use caution in calculating the COBRA premium as well as in communicating that premium to QBs. Fixing mistakes that result in over- or undercharging QBs for COBRA premiums can be administratively burdensome and raise COBRA compliance issues.



The Importance of Building Positive Relationships in the Workplace

Positive workplace relationships can help employees be happier and more engaged in their work. According to a study by Gallup, people who have a best friend at work are seven times more likely to be engaged in their jobs. In addition, people who have a good friend in the workplace are more likely to be satisfied with their jobs.

This article provides tips on building positive relationships in the workplace and the benefits that can be achieved as a result.

Tips for Creating Workplace Relationships

  • Build Trust—Trust is the foundation of any good relationship. If you trust your colleagues, you are more likely to enjoy working with them and be honest in your communications. To build trust, make sure you are dependable. Stay true to your word by completing any tasks you agree to on time and to the best of your abilities.
  • Show Appreciation—It’s easy to get caught up in your day-to-day tasks and take your colleagues for granted. Make sure to compliment your co-workers when they do something well, or even write a quick thank-you note when colleagues help out to let them know they are appreciated.
  • Be Positive—Being around negativity can be draining. Instead, focus on the good things about your job and life. Positivity can be contagious and can help you become someone that others enjoy being around.
  • Avoid Gossiping—Gossiping can cause mistrust and animosity. If you have an issue with a co-worker, talk to them directly about the issue in a mature and respectful manner. Be considerate of other people’s opinions and try focusing on the positive characteristics about co-workers rather than the negatives.
  • Take Time to Build Relationships—Finding time to connect with co-workers can be difficult when workloads are high. However, even taking five minutes to talk with someone over coffee in the break room can be a great way to connect with colleagues.
  • Be Aware of Others—If you share an office with others, be considerate of their preferences. For instance, some people prefer to work in silence, so wear headphones when you’re listening to music instead of playing it through your computer’s speaker.
  • Support Each Other’s Work—Ask your co-workers to get involved in a task you are working on and volunteer to join others’ projects. Collaborating on a shared assignment gives you the opportunity to get to know one another better.


Advantages of Workplace Relationships

Below are the benefits of positive relationships in the workplace:

  • Less Turnover—Employees with friends at work are more likely to be engaged in their work. Engaged employees are less likely to look for a new job, which can help reduce turnover-related expenses. In addition, engaged employees are likely to be more productive.
  • Develop Careers—Getting to know your co-workers can help build trust. Being on good terms with your co-workers and managers can also open the door to new promotions and opportunities that you may have otherwise missed out on.

By following the tips mentioned in this article, you can start building healthier workplace relationships and enjoy your job more.

Which employees should be paid overtime, and what are some basic rules to go by?

While many employers require that their employees have overtime approved prior to actually working it, if an employee does not receive prior approval, the employer is still required to pay the overtime. The employer may choose to discipline the employee for not following the correct procedure, but the overtime hours must be paid. The Fair Labor Standards Act (FLSA) states that nonexempt employees must be paid time and one-half their regular rate of pay for all hours worked over 40 in a seven-day workweek. Nonexempt employees are defined under the FLSA, and appropriate classification of employees is critical. In accordance with the FLSA, overtime pay may not be calculated over a two-week pay period to allow for more flexible scheduling.

Example: John works full time at Pet Mania and his hourly rate of pay is $8.75. Someone calls in sick on John’s day off, so he works an extra eight hours. For the week, John will be paid for his regular hours (8.75 x 40) as well as for the extra hours he put in (8.75 x 1.5 x 8). Therefore, rather than receiving $350 of pre-tax income for the week, John will receive $455 of pre-tax income because of his overtime pay.

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