What are COBRA administrators to do in the face of all this change? At the very least, they have to stay flexible. And that flexibility has to start with their administration system.
By Bo Armstrong
Originally Posted by BenefitsPRO
February 16, 2022
Brokers and TPAs who offer COBRA administration expect changes in the number of accounts being managed from month to month. Or at least that was the case before COVID-19 came roaring in like a huge March wind in 2020.
Suddenly, to reference a song title from the hit Broadway musical Hamilton, “The World Turned Upside Down.”
American unemployment in February 2020 stood at 3.5%, representing 5.8 million people. By April 2020, there were 23.1 million unemployed, or 14.7% — the highest rate since the U.S. Bureau of Labor Statistics began keeping records in 1948. At 4.0% unemployment in January 2022, we still have not returned to pre-pandemic levels.
On top of sheer volume, government intervention efforts further complicated matters for COBRA administrators. The CARES Act of 2020 retroactively extended COBRA enrollment periods and placed a moratorium on cancellation for premium non-payment. In 2021, ARPA provided a six-month, 100% subsidy on COBRA premiums for specific individuals.
What are COBRA administrators to do in the face of all this change? At the very least, they have to stay flexible. And that flexibility has to start with their administration system.
Regulatory upheaval
In 2009, America experienced what is now called the “Great Recession.” During its peak, more than 15 million were unemployed. To help them retain their employer-sponsored health insurance, Congress passed the American Recovery and Reinvestment Act (ARRA). Among other provisions, ARRA included a partial subsidy for COBRA. This subsidy covered 65% of COBRA premiums, with the COBRA recipient paying the remaining 35%. Employers paid the subsidy and then were reimbursed by the government.
Being the first subsidy since COBRA was initially enacted, ARRA caught everyone by surprise (and not in a good way). COBRA administration software was not programmed to account for government subsidies. Federal requirements for communication with beneficiaries, deadlines, fee collections and more were unclear. In short, 2009 was a chaotic year for COBRA administrators.
Fast-forward to the coronavirus pandemic. In January 2021, with the COVID-19 National Emergency approaching its first anniversary, unemployment was still at 6.3%, with 6.9 million unemployed and an estimated 10 million jobs lost for good.
The American Rescue Plan Act (ARPA) was enacted in March 2021 to provide extensive relief measures, including a 100% subsidy for COBRA. Even though some current COBRA administrators had lived through ARRA, they were not necessarily better prepared this time. ARPA mandates were even more complex and confusing than ARRA’s had been.
As the pandemic has dragged on, we’ve been on a rollercoaster ride of encountering, adapting and adjusting. The National Emergency is due to end on March 1, 2022, assuming it’s not extended in the wake of Omicron or another variant. Overwhelmed COBRA administrators are tensely waiting for further legislation or guidance, with justifiable concern that it will turn their world upside down yet again.
Technology solutions
Whether COBRA is administered by a broker, TPA, or employer HR department, different individuals usually handle different areas of responsibility. One or more staffers may handle onboarding and benefit assignments. Other staffers may handle terminations and COBRA compliance.
Regardless of the number of people involved, they may be relying on administrative systems that use different databases, requiring at least some duplication of effort. In a model like this, there are many steps along the way that could result in compliance violations. Add in dramatic regulatory changes like ARPA and today’s volatile job market, and the need for flexible, seamless administrative systems is clear.
Read the full article, “The case for COBRA system flexibility: expecting the unexpected,” on BenefitsPRO.
Bo Armstrong
Chief Marketing Officer, DataPath, Inc.
As Chief Marketing Officer, Bo Armstrong leads all marketing and product initiatives for DataPath, whom he joined in 2015. Bo has over 25 years of marketing leadership experience at companies ranging in size from Fortune 500 to start-ups. He has a proven record for driving results and growing revenue through dynamic marketing programs. Bo focuses on identifying emerging market trends within the benefits industry, advocating for customers and their needs. Bo holds a Bachelor’s degree in Computer Science from Texas A&M University and a Master’s degree in Religion from Liberty University.
For 40 years, DataPath has been a pivotal force in the employee benefits, financial services, and insurance industries. The company’s flagship DataPath Summit platform offers an integrated solution for managing CDH, HSA, Well-Being, COBRA, and Billing. Through its partnership with Accelergent Growth Solutions, DataPath also offers expert BPO services, automation, outsourced customer service, and award-winning marketing services.