COBRA Administration

Polestar Benefits' COBRA Administration Services allows our clients to stay focused on their business, confident that issues related to administration of their plan are being managed in accordance with the ever-changing Federal regulatory environment. Penalties are substantial (IRS claims that over 90% of all employers are out of compliance with COBRA regulations) and the active enforcement of regulations has been increased in recent years. We shift an employers COBRA liability and the personal liability of their internal plan administrator to Polestar Benefits.

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What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 mandates that any organization with 20 or more full or part-time employees must offer a "temporary continuation" of group health and Section 125 benefits to employees (and covered dependents).

Penalties for COBRA violations include:

  • Excise tax penalties of $100 per day ($200 if more than one family member is affected) may be assessed for each day the employer fails to comply with COBRA.
  • Statutory penalties of up to $110 per day under the Employee Retirement Income Security Act (ERISA).
  • Civil Lawsuits
  • Attorney's Fees and Interest

Polestar COBRA Includes:

  • Account Setup: Employer, Carriers and Individual COBRA Continuants
  • Initial Notification Letters: Newly Eligible Employees and their Dependents
  • Qualifying Event Notifications
  • Billing and Collection
  • Per Notice Fee Schedule
  • Coordination with Insurance Companies: Reports Eligibility, Changes and Terminations
  • Monthly Reports
  • HIPAA Certificate
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Highlights of COBRA Administration

  • Increased Productivity: With Polestar, you eliminate having to worry about confusing, time-consuming COBRA compliance materials and the preparation and mailing of notifications as well as document storage and eligibility tracking.  Polestar COBRA allows you to access and maintain your Company's COBRA activity faster and more accurately.
  • Specialized Expertise: A relationship with Polestar COBRA provides your company with the most advanced services.  Call us anytime if you have a question or submit requests online.
  • Rapid Implementation and Access: With Polestar COBRA, there are no installation or infrastructure expenses - the hardware, software and technology infrastructure are already in place.  This means that your company can implement a COBRA administration solution and realize the benefits in a very short time.
  • Predictable, Affordable Costs: A relationship with Polestar COBRA provides you with the most advanced COBRA compliance system while eliminating the need for a major capital expenditure.  Polestar COBRA ensures your Company's COBRA compliance with affordable, monthly or per notice rates.

Why are Domestic Partners NOT eligible for COBRA?

ERISA, the federal law that regulates COBRA continuation coverage in conjunction with the Internal Revenue Code, permits only "qualified relatives" or "qualified beneficiaries" to receive COBRA benefits. Under IRS 1999 final regulations, a qualified relative/beneficiary is defined only as a covered employee, the spouse of a covered  employee, or the dependent child of a covered employee. 

Additionally the federal law passed in 1996, called the Defense of Marriage Act (DOMA),  defines "marriage" as a legal union between one man and one woman as husband and  wife, and defines "spouse" as a person of the opposite sex who is a husband or  wife. Therefore, same sex domestic partners cannot be guaranteed federal benefits rights, such as COBRA, because they do not meet the definition of "spouse" even if local/state marriage licensing laws would define this differently.

This is further complicated with the definition of a qualified relative for opposite sex domestic partners (definition). If a opposite sex domestic partnership is not defined to meet the qualified terminology, they are not allowed to elect and continue the federal benefit either.

Useful Links

Recent COBRA Employer penalties/fines for non-compliance

NOTICE NOT RECEIVED AND COMPANY PAID $74,000...

JAMES ALLAN MIDDLETON, JR. and JULIE T. MIDDLETON, Plaintiff
versus
THE RUSSELL GROUP, LTD. (formerly ADS, Inc.) and BROOKE LICENSING, Defendants

Plaintiffs James Allan Middleton, Jr. and Julie T. Middleton allege that Defendants The Russell Group, Ltd. ("Russell Group") and Brooke Licensing ("Brooke") failed and refused to notify Plaintiffs of their right to elect continuation coverage for health care benefits as required by the Comprehensive Omnibus Budget Reconciliation Act ("COBRA").

The Plaintiffs obtained a judgment which provided, inter alia, that the Middletons were in fact entitled to COBRA notice from both Defendants after termination of the employment of James Middleton with Russell Group, and that the Defendants failed to give such notice.

CONCLUSION
IT WAS ORDERED that Plaintiffs shall have and recover of Defendants, jointly and severally, the sum of $74,000 ($37,000 to each Plaintiff)
EMPLOYER PAYS $4,110 FINE FOR NOT PROVIDING OPEN ENROLLMENT INFORMATION

CAROLE WHITE, Plaintiff
versus
KROGER (FRED MEYERS), Defendant

Carole White lost her job with the Defendant and elected COBRA.  She did not comply with open enrollment rules and was terminated.  However, she had requested a Summary Plan Description of the new plan options, of which, she did not receive.

CONCLUSION
IT WAS ORDERED a fine of $110 per day for this failure, resulting in a total fine of $4,110 paid to Plaintiff.
COBRA ELIGIBLE PARTICIPANT DID NOT RECEIVE THEIR RIGHTS AND COMPANY WAS LIABLE TO FOR PAYMENT OF EX-EMPLOYEES MEDICAL CLAIM...

WILNER VINCENT, Plaintiff
versus
WELLS FARGO GUARD SERVICES, INC

Plaintiff's Memorandum on Defendant's Failure to Give Plaintiff a COBRA Notice ("Plaintiff's Memorandum" (DE # 265), and the pertinent portions of the record, and being otherwise fully advised in the premises, the Court enters the following Order.

CONCLUSION
IT WAS ORDERED that Plaintiff's Motion for Judgment is GRANTED.  Partial Final Judgment is entered in favor of Plaintiff and against Defendants as to the ERISA medical benefits claim contained in Count V of Plaintiff's Third Amended Complaint.

Other COBRA information...

Medicare's effect on COBRA is listed here