EBCP

Question 1

HIPAA

Answer 1

Health Insurance Portability and Accountability act of 1996

Question 2

COBRA

Answer 2

Consolidated Omnibus Budget Reconciliation Act of 1985

Question 3

ACA

Answer 3

Affordable Care Act

Question 4

FMLA

Answer 4

Family Medical Leave Act

Question 5

ERISA

Answer 5

Employee Retirement Income Security Act of 1974

Question 6

What is HIPAA

Answer 6

Provides guidelines to protect Health information of individuals. PHI
It specifies how data should be protected.

Question 7

What is COBRA

Answer 7

gives an employee the right to continue their medical benefits even after termination.

Question 8

What is ACA

Answer 8

It is PPACA or Patient Protection and Affordable Care Act also called OBAMACARE, they created an online marketplace where an individual can purchase affordable health insurance regardless of pre existing health conditions.

Question 9

What is ERISA

Answer 9

it is a federal law that sets standard rules and regulations for retirement and self funded plans.

Question 10

What is FMLA

Answer 10

allows employees to take an unpaid, job protected leave for family and medical reasons up to a max of 12 work weeks of within a 12 month period.

Question 11

What is Benefit Plan

Answer 11

Is a benefit offered by the employer to its employees. EX. HMO

Question 12

What is CAFETERIA PLAN

Answer 12

Overall Term for all the benefits offered by the employers to employees who qualify under the IRC section 125. Benefits offered under this is non taxable to employees. It is called cafeteria because employees can choose from a list of benefits offered by the employers.

Question 13

Give an Example of Consistency Rule

Answer 13

Consistency rule: Change to the election being requested must match the life event. or example, if the employee had a newborn child, the requested change must be to add the child. If the employee requests to terminate the coverage of a spouse because of a newborn child, that change is not permitted.

Question 14

Who Can Sponsor a Cafeteria Plan?

Eligible employers include:

Answer 14

Corporations
Partnerships
Nonprofit organizations
Government entities
Limited liability companies (LLCs)
Limited liability partnerships (LLPs)
Sole proprietorship
Businesses that are under common control or are part of an affiliated service group (controlled groups) may sponsor a single plan for all their employees

Question 15

Individuals are NOT qualified to participate in a cafeteria plan:

Answer 15

Self-employed individuals (because they are not employees)
Partners in a partnership (but the partners can sponsor a plan)
A more-than-2%-shareholder in a s Subchapter S corporation (but the corporation can sponsor the plan), even though the more-than-2% shareholders cannot participate - e.g. Mr. DoGood).

Question 16

examples of individuals who are not considered qualified tax dependents according to the IRS, so benefits extended to them cannot be paid with pre-tax payroll deductions (or must be calculated as “imputed income” so it can be taxed).

Answer 16

Domestic partners (same sex or opposite sex)
A child who is over the age of 26 at the end of the calendar year unless disabled
Your parent, sister or grandparents
Girlfriend/boyfriend who lives with you

Question 17

How Do Employees and Their Dependents Elect the Benefits They Want?
There are 3 types of events that would allow employees to make elections:

Answer 17

When first hired (or rehired):
Newly hired or rehired employees who complete the employer’s waiting period and meet the employer’s eligibility rules are notified when they can elect benefits under the employer’s cafeteria plan. Notification is usually through email, and the enrollment done via online or paper enrollment forms.

Annual open enrollment:
Once a year, the employer will notify all its employees that they can select theirs and their eligible dependents’ benefits for the new plan year.

Life Events occur:
If a life event (such as marriage) would permit the election of benefits provided the life event is a qualified life event according to IRS rules.

Question 18

permitted life events: There are three rules to remember about changes to elections because of a life event:

Answer 18

1. The life event must be in the list of qualified life events listed by the IRS; 2. The life event must be reported to the employer and the change to the election made by the employee within the required reporting period, usually 30 days from when the life event happened. 3. The change to the election being requested must match the life event. This is called the “consistency rule.” For example, if the employee had a newborn child, the requested change must be to add the child. If the employee requests to terminate the coverage of a spouse because of a newborn child, that change is not permitted.

Question 19

What is Group Term Life Insurance

Answer 19

Benefits that employers give all their employees and pay 100% of the premium cost. These benefits do not have to be elected by employees; they automatically get enrolled in those benefits.

Question 20

What is Waiting Period?

Answer 20

this is the amount of time an employee must wait after being hired before they can elect benefits. Note: There are IRS rules that limit waiting periods 90 days MAX

Question 21

IRS Partial List of Qualified Life Events (Most Common) GIVE at least 3

Answer 21

Change in Status
Significant Cost Changes
Significant Curtailment of Coverage
Addition or Improvement of Benefit Package Option
Change in Coverage of Spouse or Dependent Under Another Employer Plan
Loss of Certain Other Health Coverage
Cobra Qualifying Event
Court Judgments, Decrees, or Orders
Entitlement to Medicare or Medicaid
FMLA Leave
Special Rule on Health Savings Accounts (not really a life event)
Reduction of Hours
Healthcare Exchange Enrollment

Question 22

Does cafeteria plan allows changes for New Born? Yes or no? Explain.

Answer 22

newborn or adopted child can be added to the benefit plan of the employee within 30 days of the date of birth (or adoption) retroactively effective on the date of birth.

Question 23

Sample Case Study: Marital Status Change

Karen married Joe in the middle of the plan year. . Joe is between jobs and has no health coverage. Can Karen add Joe t her Health coverage? Why. When is the effective date?

Answer 23

Yes she can. Karen, within 30 days of her marriage to Joe, can inform her employer of this life event and add Joe to her health coverage effective usually the first of the month after Karen submits the election change.

Question 24

Can you change your Cafeteria plan in the middle of plan year?

Answer 24

No, since it is irrevocable according to IRS rules however IRS understands certain life events that you will experience that would allow you for changes and it is called permitted events by IRS.

Question 25

Election Rules Include the Following:

Answer 25

Only employees can make elections for themselves and their qualified dependents.

Employers cannot just change payroll deductions without the consent of the employee for the employee’s benefit elections (unless it was being corrected because it was wrong).

Insurance and other contractual provisions may impose additional restraints on elections and election changes. For example, if the employer is late in sending elections to the insurance company, the insurance company can impose retroactive rules such as 60 days from the submission date would they allow a retroactive effective date of coverage. There are similar rules for submitting termination of coverage.

Question 26

What is a Domestic Partner

Answer 26

Partners that are not married, either opposite sex or same sex. Some employers allow employee to add them on their benefit but is is not required. Some does not allow.

Question 27

What is Summary of Benefits Coverage (SBC)

Answer 27

is a document that summarizes for the covered person what his or her health insurance benefit covers. In other words, it’s a benefits summary. Even COBRA participants have to receive an SBC.

Question 27

2 Domestic Partner Affidavit as a proof

Answer 27

A: EE and partner must register their partnership in the state that allows or requires registration of Domestic Partnership. Like state of California, once registered they will be issued a CERTIFICATE OF DOMESTOC PARTNERSHIP.

B: Domestic Partners are required to sign an affidavit. The affidavit certify that they are:

*each others sole domestic partner and remain indefinitely
*reside in same residence
*Emotional and Financially interdependent
*must be of legal age 18 yrs old, and mentally competent
*not blood related
*Not legally married nor domestic partner of anyone else.

Question 28

What is Deductible

Answer 28

The amount you must pay first, before the insurance will start to cover your medical expenses. This is usually set for an employee, and a higher amount for the family if you cover your family.

Question 29

What is coinsurance

Answer 29

This is expressed in a %. This is the % of the expense you are responsible for. For example, a 20% coinsurance means, the health plan will pay 80% of the medical expense, and you will pay 20%

Question 30

What is Copayment

Answer 30

This is expressed in a dollar amount and usually applicable to doctor’s visits, or prescription costs. For example, a $25 copay for a doctor’s office visit means you will only pay $25 when you see your doctor.

Question 31

What is OUT OF POCKET MAXIMUM

Answer 31

In an entire plan year you will not pay more than this amount out of your pocket for your medical expenses. There is a separate maximum for the employee, and a combined maximum for the entire covered family. This is usually expressed as $4,500/$9,000. This means that the employee will not be responsible for no more than $4,500 in medical copayments or coinsurance in a plan year for his/her medical expenses, and a combined of $9,000 for the entire family.

Question 32

What is In Network

Answer 32

Doctors, hospitals and medical providers who have the lowest contracted rates with an insurance company are “in-network” of an insurance company.
in-network” provider, your health plan benefits pay a bigger percentage and usually your copayment lower.

Question 33

Give an OUT of POCKET MAXIMUM sample

Answer 33

Employee has his wife and child covered and their medical plan has a $2,500/$6,500 out of pocket maximum and a January - December plan year. The employee goes to the doctor 100 times from January - June and the doctor’s visit copayment every time is $25. So far, he has spent out of his pocket $2,500 ($25 x 100 visits). He gets hospitalized in July, and their medical plan has a 10% coinsurance (meaning he must pay 10% of the cost), since he already spent out of his pocket $2,500 in the plan year, he will pay “zero” for his hospitalization.

Same details as above but add that employee’s wife also had surgery in Aug and the bill was $40,000. She must pay $4000 (their plan has a 10% coinsurance). In September, their child had to go to the ER for a broken arm. Their plan’s ER copayment is $350. The family will not have to pay the $350 because as a family they have already paid out their pocket a total of $6,500 ($2,500 for the employee and $4,000 for the wife).

As of January the following plan year, everything resets back to $0.

Question 34

These are the 4 common types of medical plans:

Answer 34

Health Maintenance Organizations (HMOs)

Preferred Provider Organizations (PPOs)

Exclusive Provider Organizations (EPOs)

High-Deductible Health Plans (HDHPs) which are often linked to Health Savings Accounts (HSAs) and may be called “H.S.A. Medical Plans” or “H.S.A. Compatible Medical Plans”

Question 35

What is HMO

Answer 35

Health Maintenance Organization is a type of medical plan that delivers health care services through a network of health care providers and facilities exclusively. To receive benefits under this plan you must go to an HMO provider.
*you and your dependents must select a PCP, and a primary hospital within the HMO network.
When you need to see a doctor, you must go to your primary care physician (PCP) first, and your PCP will determine if you need to see a specialist and will request from the insurance company a referral authorization for you to see a specialist in the HMO network. If you need to be hospitalized, your PCP must also obtain for you an authorization from the HMO.
HMOs are restrictive, but in exchange, HMOs usually have the highest levels of coverage, meaning hospitalizations are usually covered at 100% and doctor’s office visits have low copayments of $15 - $25 per visit only, and usually there are no deductibles.

Question 36

What is PPO

Answer 36

Preferred Provider Organization (PPO) Plan
in the PPO network- without needing a PCP or a referral from a PCP. PPO benefit plans usually have in-network coverage (which pays a higher % of the cost) and out-of-network coverage (which pays a much lower % of the cost).

This was a very popular benefit plan because it was less restrictive than an HMO and allowed freedom to directly go to a provider in the PPO network.

Question 37

What is EPO

Answer 37

Exclusive Provider Organization (EPO)

EPO plans may be considered a hybrid of an HMO and a PPO as they are a bit more flexible than an HMO and because employees do not need a PCP or a referral from a PCP to see a specialist in the EPO network of providers.

The key feature of the EPO is there is NO coverage for out of network. You have to get medical care exclusively from the list of providers in the EPO plan.

Question 38

What is HDHP

Answer 38

High Deductible Health Plan (HDHP)

HDHPs are similar to a PPO except that it must meet minimum deductible and out of pocket maximums as defined by the IRS annually.
HDHPs is partnered with a Health Savings Account (HSA) where individuals can contribute funds on a pre-tax basis to pay for current or future medical expenses.

Question 39

Types of Dental Plans

Answer 39

Preferred Provider Organizations (PPO) or Exclusive Provider Organization (EPO)
- A PPO or EPO dental plan works similarly like it’s medical counterpart. The dental insurance company contracts with a set of dentists for lower rates (in-network dentists) and participants can go to any of the in network dentist to receive dental care. No referral required, but usually the participant has to pay a copayment or coinsurance for the dental services. With EPO plans, there is no coverage for any out of network dental provider.

Dental Health Maintenance Organizations (DHMO)
-A DHMO dental plan works similarly like it’s medical HMO counterpart. The participant must select a Primary Care Dentist and must use that dentist or provider to receive all dental care. In exchange for this restriction, usually the participant pays nothing or very little for the dental services.

Question 40

How is Group Term Life insurance computed

Answer 40

Premiums are usually based on volume multiplied by a rate. Example: $.12 per $1,000 of life insurance benefit. So the monthly premium for a $100,000 life insurance benefit would be $12.00

If the life insurance benefit is 2 x annual salary. The beneficiary of an employee with an annual salary of $40,000 who dies will receive an $80,000 life insurance benefit.
A multiple of annual salary (i.e. 1 or 2 times) up to a maximum benefit amount.
Life insurance benefit amount is reduced by a specified percentage if the employee reaches a particular age (commonly age 65, age 70). Example, the life insurance benefit is reduced by 35% at age 65. (By the way, the premiums get reduced too).

Question 41

Types of Group Term Life Insurance
three (3) types of group term life insurance:

Answer 41

Basic Group Term Life – is the most basic coverage offered and 100% paid by the employer. This is called “guaranteed issued” in that no medical questions or medical exams are required to qualify for the life insurance benefit.

Supplemental Group Term Life – is often offered together with a basic group term life insurance that the employee can “buy up” to add to their basic group term life benefit. It is a voluntary, and the premium for this supplemental additional life insurance benefit is paid for by the employee through payroll deduction. Note: this additional life insurance benefit is not automatically “guaranteed”. The employee or dependent must complete an Evidence of Insurability (EOI) and must be approved by the life insurance company before it becomes effective.

Portable Term Life – is a group life insurance that allows employees to continue their life insurance coverage should they lose their employer’s group eligibility through resignation, termination or retirement. So long as they are able to make direct payments to the life insurance company, then they get to continue their life insurance protection until they turn 70 years old.

Question 42

What is STD

Answer 42

Short-Term Disability Insurance (STD)
replaces a % of an employee’s income should a non-job-related sickness or injury (“disability”) making the employee unable to go back to work for a short amount of time. Note: Work-related sickness or injuries are covered by workers’ compensation, and NOT STD insurance.
-short-term disability may cover illnesses or injuries that persist for less than six months to a year a period of 9 to 52 weeks (equivalent to 1 year) depending on the insured’s medical condition and his/her STD plan. An example would be someone going through chemotherapy but is expected to recover fully.
The percentage will depend on the benefit plan design. Most common will between 40% to 60% of the individual’s weekly salary is provided by this benefit.

Question 43

What is LTD

Answer 43

Long-Term Disability Benefit Plan (LTD) is an insurance policy that replaces a % of an employee’s (usually 50% to 60% of their monthly salary) when the employee becomes sick or injured and are unable to go back to work for a long period of time. LTD insurance picks up where STD insurance ends.
an LTD benefits package may start between 90 to 180 days (elimination period) from the start of the illness or injury and could last for 2 years to until retirement age.
In most cases, LTD plans may contain exclusions for diseases, pre-existing conditions and other conditions that would pay disability benefits to an employee who is unable to perform his/her current job versus a policy that expects the employee to perform another job that he/she can do.

Question 44

What is HCFSA

Answer 44

Healthcare FSA is a Reimbursement benefit plan for qualified medical expenses. It starts with the employee electing an annual amount to be deducted from his/her pay through payroll deduction on a pre-tax basis. The maximum amount the employee can elect cannot exceed the annual limit set by the IRS. The annual Healthcare FSA maximum election limit for 2023 and 2024 is $3,050.
The money that the employer deducts from the employee (per paycheck) is deposited to the employee’s HCFSA account.

The employee then, can use the funds in his Health Care FSA account to reimburse himself for qualified medical expenses through the submission of a completed claim form and substantiation (receipts).
uniform coverage rule applies to Health Care FSA plans – this rule means that the employee can submit for reimbursement up to the amount he elected, regardless of whether the employee has fully funded the elected amount through payroll deductions.

Example: Employee elects $1,200 at the start of the plan year, which equates to $50 per paycheck deduction (the employer has 24 pay periods). The employee submits a claim for $1,000 after only 2 of 24 payroll periods (at this point he has funded his account only $100). The employee can be reimbursed the full $1,000 of his claim even though he has not yet fully funded his entire election of $1,200.

FSA Accounts are generally “use-it-or-lose-it” plans which means that the money in the account must be spent for qualified medical expenses at the end of the plan year.

Question 45

2 types of Health Care FSA Plans:

Answer 45

Regular Health Care FSA:

This plan can reimburse the employee for all qualified medical, dental and vision expenses. Enrollment in this plan disqualifies an employee from contributing to a Health Savings Account because it is considered as a “health plan”.

Limited Purpose Health Care FSA:

This plan limits what it can reimburse the employee to vision and dental expenses only. Enrollment in this plan does not disqualify an employee from contributing to a Health Savings Account because this is not considered as a “health plan.

If an employer wants to offer a Health Savings Account (H.S.A.) to its employees but also want to offer them a Health Care FSA account benefit, this IS the only type of Health Care FSA that can be offered with an H.S.A.

Question 46

What is DCFSA

Answer 46

Dependent Care FSA is a Reimbursement benefit plan for childcare expenses
Dependent Care FSA benefit plan is not a medical benefit plan at all. So, the uniform coverage rule that applies to Health Care FSA does NOT apply to Dependent Care FSA plans. This means that the employee can submit for reimbursement ONLY up to the balance in his Dependent Care FSA account.
Example: Employee elects $5,000 at the start of the plan year. Employee submits a claim for $500 after only 2 of 24 payroll periods so his account balance is funded the account $416. The employee can be reimbursed ONLY $416 out of the $500 claim he submitted.
The child must be 13 years or younger for the expense to qualify for reimbursement unless the child is deemed disabled.

Question 47

HSA and FSA difference

Answer 47

HSA Health Savings Account need HDHP rollover the next year may offer higher contribution limits. is a tax-exempt savings account that allows employees to contribute and withdraw for medical expenses later in the plan year. The money that an employee elects to contribute through payroll deduction is tax-exempt. Employees are also allowed to change the amount they contribute monthly.
**The individual must not be covered by any other health plans other than HDHP like a regular Health Care FSA plan. **Limited Purpose Health Care FSA is OK.
**The individual must not be enrolled in Medicare.

FSA Flexible Spending Accounts use it or lose.

Question 48

What is Qualified Transit and Qualified Parking Benefit Plan (Commuter Benefits)

Answer 48

benefit plans that allow employees to set aside funds from their paycheck on a pre-tax basis (before taxes are taken out) up to a maximum monthly amount specified by the IRS.
This benefit CANNOT be offered under a Cafeteria Plan but the payroll deductions are still on a pre-tax basis, but it falls under IRS Code Section 132.

Question 49

What is Employee Assistance Program (EAP)

Answer 49

primarily provide confidential counseling service for employees dealing with personal challenges or needs. It is a benefit offered by employers to their employees to support their well-being in the workplace and in their personal lives.

100% of the premium for this benefit is paid for by the employer, and this benefit is automatically provided for all employees. The employee does not have to elect this benefit, and there are no prerequisites to receive this benefit.

Question 50

Voluntary Benefits (Worksite Benefits)

Answer 50

(also known as Worksite Benefits) are insurance products offered by employers so that employees can elect to supplement their existing benefit coverage to help meet their needs. Some of these plans can help employees pay for out-of-pocket medical expenses. Some of these plans cover expenses for pets, or pre-paid legal services.

These voluntary benefit plans are 100% employee paid, and some employers allow the convenience of payroll deduction to pay for the premiums for these plans. The premiums for these plans are not tax-free so they are deducted post-tax.

Question 51

What is a Premium?

Answer 51

an insurance premium is defined as the amount of money an insurance company is going to charge the employer for the insurance and benefits under a policy that the employer purchased for its employees and dependents.

Question 52

How to Compute STD Premium
Example: Quoted rate of $.225/10 benefit coverage amount of 60% of weekly salary to 1500 benefit week maximum.
EE earns $92,500 52 weeks a year and Earns on a weekly salary?

Answer 52

We calculate 60% of 1769 which is $1061. $1061x(.225/10) = 23.87 monthly Premium

Remember that even if the weekly salary exceeds the maximum weekly benefit, their benefits and premium are calculated based on the maximum weekly benefit amount.

Question 53

How to compute LTD Premium
Example: Quoted rate of $.30/100 benefit coverage amount of 60% of MONTHLY salary to $5000 benefit week maximum.
EE earns $60,000 12 months in a year

Answer 53

Salary of EE is $5000
Calculate is ($5000x($.30/100) = $15 Monthly premium

Question 54

Coverage Start date for New Hire, New Born, Marriage?

Answer 54

New hire : 1st of the ff month after 30 day waiting period
Newborn : Date of Birth
Marriage: 1st of the month ff the notif of marriage

Question 55

Wash Rule

Answer 55

that if coverage starts BEFORE the 15th of the month, the premium for the entire month will be chargeable and payable.

that if coverage starts AFTER the 15th thru the end of the month, NO premium is due

that if coverage ends BEFORE the 15th of the month, NO premium is due for that month.

that if coverage ends AFTER the 15th thru the end of the month, the premium for the entire month will be chargeable and payable.

Question 56

Coverage Start date for Termination, Death, Divorce

Answer 56

Termination: End of the month, regardless the date of termination.
Death: Date of death
Divorce: Last day of the Month (must notify employer 60 days of divorce decree date)

Question 57

Funding
There are two primary ways that employers fund their benefit plans.

Answer 57

Fully-insured basis:
This means the employer purchases a policy with specified list of benefits from an insurance company and pays a premium to the insurance company based on the number of people who are covered. The financial risk to the employer is fixed and predictable because the premiums are set for a plan year. The financial risk is carried by the insurance company which will pay for any and all claims submitted. Most benefit plans are funded this way.
**A fully-insured plan is the more traditional way to structure an employer benefit health plan. An employer would purchase a policy from an insurance company and pay a premium to the insurance company for the benefits outlined in the policy.

The employer pays a monthly premium based on the number of employees enrolled in the plan each month to the insurance carrier in exchange for the coverage benefits outlined in the policy purchased by the employer.

The premium rates are fixed for a plan year

The insurance carrier collects the premiums and pays the health care claims based on the coverage benefits outlined in the policy purchased.

The insurance company takes the full risk in case the claims that are paid in a plan year exceeds the amount of premium that the employer paid to the insurance company.

The only risk to the employer is the fixed premium amount payable to the insurance company monthly.

Self- insured (self-funded) basis:
This means the employer determines the benefits and determines the estimated claims cost for a plan year using an actuary and coming up with its own premiums (equivalent). The employer will pay for all the claims submitted. The financial risk to the employer can vary widely. Typically, self-funding is used for medical/ health benefit plans. A fully-insured plan is the more traditional way to structure an employer benefit health plan. An employer would purchase a policy from an insurance company and pay a premium to the insurance company for the benefits outlined in the policy.
The employer pays a monthly premium based on the number of employees enrolled in the plan each month to the insurance carrier in exchange for the coverage benefits outlined in the policy purchased by the employer.

The premium rates are fixed for a plan year

The insurance carrier collects the premiums and pays the health care claims based on the coverage benefits outlined in the policy purchased.

The insurance company takes the full risk in case the claims that are paid in a plan year exceeds the amount of premium that the employer paid to the insurance company.

The only risk to the employer is the fixed premium amount payable to the insurance company monthly.

Question 58

What is Stop Loss Insurance?

Answer 58

Stop-loss insurance is what employers purchase who have decided to self-fund their benefit plan to protect itself against catastrophic or unpredictable losses from claims submitted by its employees. Under a stop-loss policy, the stop loss insurance company becomes liable for losses that exceed certain limit.

Question 59

There are two types of self-funded insurance that are usually purchased together:

Answer 59

Specific Stop-Loss: provides protection for the employer against a high claim on any one individual. This is protection against abnormal severity (high) of a single claim expense rather than abnormal frequency of claims in total. Specific stop-loss is also known as individual stop-loss. Per person deductible must be met first before the stop loss insurance coverage will pay. Sometimes add an “aggregating specific feature,” covered in the next slides.

Aggregate Stop-Loss: provides protection for the employer by providing a ceiling on the dollar amount of claims expenses that an employer would pay, in total, during a contract period. The carrier reimburses the employer after the end of the contract period for aggregate claims after the attachment point (corridor).

Question 60

What is Disclosure

Answer 60

A stop loss carrier will require final disclosure of all known high claimants or high-risk individuals before providing a’firm’ rate quote. No rate should be considered final until completion of this task.

Question 61

What is Lasering

Answer 61

Upon rate quote or renewal, a carrier may place a higher deductible on certain individuals or even exclude them from coverage. This is typical when a stop loss carrier is quoting an employer group for the first time.

Question 62

How much is the admin Fee in cobra

Answer 62

(2%) admin fee.

Question 63

Who Must Comply with COBRA?

The COBRA law must be complied with by every employer in the US EXCEPT:

Answer 63

The US federal government
Some church-related organizations
Employers who have less than 20 employees. This is measured from the prior calendar year, and the employee count is based on the highest employee count on more than 50% of the working days of the prior year.

Question 64

Are Domestic Partner considered QB?

Answer 64

Domestic partners are NOT considered Qualified Beneficiaries under COBRA.

Question 65

EE Qualifying Events Period and Dependent QE period?

Answer 65

EE : Termination/ Reduction of hours is 18 months
Dependent : Divorce death is 36 months

Question 66

Can you continue FSA in COBRA?

Answer 66

Health Care Flexible Spending Accounts (FSA) are considered group health plans and are subject to COBRA – but ONLY if at the time of the COBRA qualifying event and termination of coverage, the Health Care FSA account of the employee has a balance on the account (not overdrawn).

Health Care FSA coverage may only be continued through the end of the plan year in which the qualifying event occurred.

Note: Why is this important to know? Because all the other health plan benefit coverages can be continued under COBRA for either the 18 or 36 months, but Health Care FSA is only through the end of the current plan year.

Question 67

What is General Rights (GR) Notice

Answer 67

General Rights (GR) Notice, also sometimes referred to as Initial Rights Notice, informs employees of their rights under COBRA in the event that in the future they experience a COBRA qualifying event, the employee was already notified of their rights and obligations under the COBRA laws.

This must be sent to all employees who become enrolled in group health coverage.

This must be mailed to the employee 90 days from the start of health care coverage.

Question 68

What is Specific Rights (SR) Notice

Answer 68

When an employee or the employee’s dependent experiences a COBRA Qualifying event that causes the loss of health care coverage, the employee’s employer is required by the COBRA law to mail to the employee or dependent a COBRA Specific Rights (SR) Notice (sometimes called “COBRA Qualifying Event Notice”). The language in the notice is dictated by the COBRA law.

**The employer has 30 days to notify their TPA, and the TPA then has 14 days to mail the COBRA SR Notice.

Question 69

How Does a Qualified Beneficiary (QB) Elect COBRA?

Answer 69

Qualified Beneficiaries are given 60 days to elect COBRA coverage from the COBRA SR Notice mail date.

Question 70

COBRA first premium payment

Answer 70

45 days after the COBRA election is made. (with the added 2%)

Question 71

Jim was terminated from employment on January 15. His health care coverage as an active employee ended on January 31. His COBRA SR Notice was mailed out on February 10th.

Question:

When is his last day to elect COBRA?

Answer 71

April 10 which is 60 days from the mail date of the COBRA SR Notice.

Question 72

Kelly is an active employee with ABC Corp. currently enrolled on the Kaiser HMO health plan. She is planning to retire and elect COBRA. Her current employee payroll contribution is $75.00/month, while her employer contributes $250.00/month.

Question:

Based on these amounts, how much would her monthly COBRA premium be?

Answer 72

($250.00 + $75.00) x 1.02 = $331.50. The $250+75 represents the full premium cost of the benefit plan. Then a 2% admin fee is added to the premium.

Question 73

COBRA Termination

Answer 73

COBRA premium is not paid in full in a timely manner

The Employer stops providing group health benefits coverage to any employee (e.g., company closure)

QB becomes covered under another group health plan after electing COBRA (e.g. gets another job and is now covered under a new employer)

QB becomes entitled to Medicare after electing COBRA

Disabled QB on an extension is determined not to be disabled after all

Question 74

Self Insurance

Answer 74

rather than paying an insurance company to pay medical, dental and vision claims, we pay the claims ourselves, using a third-party administrator to process the claims on our behalf.