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COBRA administration can be handled by either the employer or a third-party administrator, but as the legal obligation still falls to the employer to comply with the law, all employers should make sure these administrative steps are being completed and done so in a timely manner.
COBRA administration requires four basic compliance components:
Step 1: Initial Notification
Employers must ensure that a COBRA general notice is provided to all eligible group health care participants within 90 days of becoming eligible to participate in the group health plan.
The best options for providing notice are the following:
Send a letter by first-class mail to the employee’s home address with the employee’s name and the spouse’s name or “& Family,” if applicable.
Include the general notice in the summary plan description (SPD) and send by first-class mail to the employee’s home address with the employee’s name and the spouse’s name or “& Family,” if applicable.
Step 2: Qualifying Event Notices
When employees or dependents experience a qualifying event, the employer must notify the plan administrator within 30 days of the event. The administrator must then provide an election notice to the employee, the dependents or both within 14 days of receiving the notice of the qualifying event, notifying them of their eligibility to enroll in COBRA coverage, the terms and amount of the premium payment, and the beginning and ending dates of coverage.
Step 3: Insurance Carrier Notification
Employers must notify the insurance carrier that the employee’s group coverage has ended and that the COBRA election form has been provided. If COBRA is elected, insurance will be reinstated as of the date group coverage ended.
Step 4: Election and Payment
If COBRA coverage is not elected within 60 days of when the election notice was sent, the employer’s obligations end, and no further action is required.
If COBRA coverage is elected within 60 days of when the election notice was sent, employers must allow 45 days from the date of election for the initial premiums owed to be paid. Once received, the employer must notify the insurance carrier to reinstate coverage back to the initial end date so there is no gap in coverage. If the employee continues to pay premiums on a timely basis, and no secondary qualifying event or allowable reason for early termination occurs, no further action is needed.
Step 5 (if needed): Late or Missing Payments
Premiums not received. If at any time premiums are not received by the established due date, the employer must allow a 30-day grace period to receive the premium. If payment is still not received by the end of the 30-day grace period, the employer may cancel coverage and must provide a written Notice of Termination of Coverage as soon as practicable.
Step 6 (if needed): Secondary Qualifying Event
If a secondary qualifying event occurs during COBRA coverage, a letter indicating the new end date for COBRA and any new premiums must be sent as soon as practicable. Second qualifying events during continuation coverage include the death of the covered employee, the divorce or separation of the employee and spouse, the covered employee’s becoming entitled to Medicare, or the loss of dependent child status under the plan. In these circumstances, coverage is extended to 36 months from the original continuation start date for the qualified beneficiary losing coverage due to the secondary qualifying event.
Step 7 (if needed): Ineligibility Notice
Current or former employees not eligible for COBRA continuation coverage who request COBRA coverage must be sent a Notice of Unavailability of Continuation Coverage, explaining the reasons they are not eligible for continuation coverage.
HSA/HDHP Limits Increase for 2023Recently, the IRS released Revenue Procedure 2022-24 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2023. The IRS is required to publish these limits by June 1 of each year. The limits include:
– The maximum HSA contribution limit
– The minimum deductible amount for HDHPs
– The maximum out-of-pocket expense limit for HDHPs
These limits vary based on whether individuals have self-only or family coverage under an HDHP.
Eligible individuals with self-only HDHP coverage will be able to contribute $3,850 to their HSAs for 2023, up from $3,650 for 2022. Eligible individuals with family HDHP coverage will be able to contribute $7,750 to their HSAs for 2023, up from $7,300 for 2022. Individuals aged 55 or older may make an additional $1,000 “catch-up” contribution to their HSAs. The adjusted contribution limits for HSAs take effect as of Jan. 1, 2023.
The minimum deductible amount for HDHPs increases to $1,500 for self-only coverage and $3,000 for family coverage for 2023 (up from $1,400 for self-only coverage and $2,800 for family coverage for 2022). The HDHP maximum out-of-pocket expense limit increases to $7,500 for self-only coverage and $15,000 for family coverage for 2023 (up from $7,050 for self-only coverage and $14,100 for family coverage for 2022). The adjusted HDHP cost-sharing limits take effect for the plan year beginning on or after Jan. 1, 2023.
Action StepsEmployers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2023. Also, employers who allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.
Attracting and Retaining Employees During the Great Reshuffle
While employees continue to quit their jobs at high levels, it no longer appears that massive numbers of workers are leaving the workforce entirely. Economists have begun referring to the situation as the “Great Reshuffle” as total employment in the United States continues to trend up. Employees have been finding better jobs, with key decision factors generally revolving around compensation, benefits, career advancement and workplace flexibility.
Here are some common strategies employers can explore when it comes to attracting and retaining workers in today’s labor market.
– Invest in career growth.
Many workers desire professional development opportunities and are willing to leave their current jobs in search of career growth. Employers can simultaneously enhance their staffing levels and worker skill levels by offering these workers a chance to enrich their careers via upward mobility.
– Offer flexibility.
Surveys overwhelmingly indicate that many employees prefer to retain the flexible work options they’ve been afforded during the COVID-19 pandemic. Depending on what’s feasible, this could mean allowing employees to work from home, letting employees have flexible working hours or providing flexible time-off policies.
– Provide mental health and well-being resources.
Mental health and general well-being are now commonly discussed in employment conversations. Employers can help demonstrate how much they value their workers by expanding mental health and well-being resources.
There’s no one solution to today’s attraction and retention challenges. However, employers should consider what initiatives fit into their talent strategies.
EEOC and DOJ Issue Guidance on the ADA and the Use of Artificial Intelligence, Algorithms and Software
The U.S. Equal Employment Opportunity Commission (EEOC) and Department of Justice (DOJ) recently issued new guidance about how employers’ use of artificial intelligence (AI) and other software tools to make employment decisions may result in unlawful disability discrimination under the Americans with Disabilities Act (ADA).
The agencies warned that algorithmic decision-making tools—mainly when used to hire, monitor performance, determine pay or performance, or establish other terms and conditions of employment—may discriminate against people with disabilities.
“We are sounding an alarm regarding the dangers tied to blind reliance on AI and other technologies that we are seeing increasingly used by employers,” said Kristen Clarke, DOJ assistant attorney general, during a press call.
EEOC GuidanceThe EEOC’s guidance highlighted how employment software tools might violate the ADA, such as:
– The employer does not provide a reasonable accommodation necessary for an individual to be rated fairly and accurately by software.
– The software screens out an individual with a disability, even though the individual can do the job with a reasonable accommodation.
– The software makes disability-related inquiries or includes medical examinations.
The EEOC also provided best practices to help employers avoid these violations.
DOJ GuidanceThe DOJ’s guidance provides examples of the types of software tools employers use, clarifies that employers must consider various disabilities when designing or choosing their software and explains when an employer must provide a reasonable accommodation when using software tools.
Employer TakeawaySeveral factors have led these agencies to address this topic. One is the ongoing unemployment challenge for workers with disabilities. The Bureau of Labor Statistics’ April data revealed a labor force participation rate of 23.1% for people with a disability, compared with 67.5% for those without.
Employers should review this guidance and assess their employment technology and processes to ensure they are not at risk for ADA violations.
Hiring and Managing Seasonal Employees
With the summer hiring season underway, employers should begin thinking about how best to hire and manage seasonal employees. Employers who do not dedicate time to these critical steps risk having to face disgruntled employees, unhappy customers, and even legal violations. To learn some best practices for hiring and managing seasonal employees, please watch the video.