Survey shows employers still challenged by COBRA costs and time requirements

Not surprisingly, COBRA participants are sicker and in turn have higher claim costs than active employees, according to the 2004 Spencer Benefits Reports (Spencer), a bi-annual survey of U.S. employer's experiences with COBRA.

The average cost of claims for COBRA participants tends to be 46 percent higher than active employee claims.

The Spencer survey found on average for the 2003 plan year, 7.6 percent of all covered employees and dependents became eligible for COBRA coverage, while only 20.4 percent of those eligible ever elected to continue with the COBRA coverage.

Among the 173 companies that responded to the survey, the annual health care cost averaged $5,721 per employee/participant, 16 percent higher than costs in 2001 of $4,927.For COBRA participants, the cost averaged to $8,353 per year, 12 percent higher than 2001.A majority of those responding to the survey charge the full 102 percent allowed by the law for the continuation coverage.

The length of time that participants are remaining on COBRA has held steady for the prior six years, however this survey found for an 18-month Qualifying Event, the average time on COBRA was 9.6 months. Those with 36-month events remained on COBRA an average of 17.6 months.

The Spencer survey identified five areas of difficulties with COBRA:

• Cost of coverage, both for the employer and the employee
• Collecting premium payments
• Keeping up with record keeping burdens associated with continuation coverage
• Notifying employees and other beneficiaries and being notified of COBRA eligibility and changes
• Communicating the plan to participants and beneficiaries

Infinisource is able to assist employers overcome these challenges.With the Premium Collection Service, election forms and payments are sent to Infinisource.All time frames for the payments are monitored.Reports are sent to the employer or carrier directly to indicate when to reinstate someone for COBRA coverage and when to remove them due to nonpayment of the coverage.Please contact a sales representative at 800-779-6384 for more information about this service.

In this Issue:

• HIPAA Portability Rules Finalized
• Infinisource Adds Individual Health Savings Accounts to Consumer Driven Health Care Product Menu
• Survey shows employers still challenged by COBRA costs and time requirements
• The Infinisource Seminar Series
• Opinion Letter Released by Department of Labor Provides Input on Counting Temp Workers for FMLA

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