COBRA Test

Test Yourself On COBRA Compliance

1.) Employee Tom drops his wife, Mary, from his insurance coverage on January 1. Two months later, their divorce is finalized. Mary informs you immediately of the divorce, but you inform her that Tom dropped her coverage on January 1. You tell her COBRA is not available because on February 28, the day before the divorce was finalized, she had no coverage. Can the employer deny Mary COBRA election under these circumstances? Yes or No?

2.)Bill, 44, a Qualified Beneficiary, began COBRA continuation on January 1, 2000. His premium is $200, but on April 1, his former employer's premium increased. Bill began paying $240 a month on April 1. Bill's 45th birthday is September 1, and he falls into a higher rate bracket, raising his premium to $300 a month. Can the employer begin to charge Bill $306 (premium plus administrative fee of 2%) Yes or No?

3.)Lisa, 64, terminates her employment and elects COBRA coverage for herself and Lyle, her husband. Lisa turns 65 twelve months later and elects Medicare Part A and B coverage for herself. How long can Lyle remain on COBRA?

A. He must be termed immediately
B. 6 more months to total 18 months
C. 17 more months to equal 29 months because of Medicare Qualifications
D. 24 more months to equal 36 months because of Medicare Qualifications

The correct answers are:

1) No
2) No, the employer cannot change the COBRA premium more than once in a 12-month period (Employers are stuck paying the extra premium. ClientServ suggests contacting vendors to discuss the situation--it's more efficient than persuading lawmakers.)
3) (D) Lyle can continue for a total of 36 months

The IRS and Department of Labor take COBRA enforcement quite seriously. They frown on any errors that deny Qualified Beneficiaries their benefits. Fines begin at $200 per day. Added to this are any medical or legal bills that accrue as a result of the error.

Working with terminated employees is not part of an employer's strategic profit plan. Penalties and fines are never budgeted expenses. Why assume the risk? ClientServ offers you the full range of COBRA administration and handles your risk.