Understanding COBRA Administration Services in the City of Houston
COBRA Administration Services brief by the Human Resources Department, details the Consolidated Omnibus Budget Reconciliation Act (COBRA) enacted in 1986. It mandates employers with 20+ employees to provide temporary continuation of health insurance at group rates to qualified beneficiaries like former employees, spouses, and dependent children. Information is provided upon employment, termination, divorce, and death. The duration of COBRA coverage varies for different beneficiaries, with specific monthly rates illustrated for different participant scenarios. The current status of the City's COBRA services and a recommendation to approve an amendment for COBRA administrative services are also included.
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COBRA ADMINISTRATON SERVICES Briefing by Human Resources Department CITY OF HOUSTON BUDGET AND FISCAL AFFAIRS COMMITTEE MARCH 6, 2018
OVERVIEW 2 COBRA Consolidated Omnibus Budget Reconciliation Act; enacted by US Congress in 1986. It s a federal mandate for employers with 20 or more employees to provide COBRA services to beneficiaries. Provides temporary continuation of health insurance at group rates. COBRA subscribers pay the employee and employer portion of the benefits costs plus two percent (2%) administrative fee. Qualified beneficiaries are certain former employees, spouses, former spouses, and dependent children.
WHEN IS COBRA INFORMATION PROVIDED? 3 Upon employment Upon voluntary and involuntary termination Divorce Death of terminated employee who has COBRA Notice of plan changes, etc.
DURATION OF COBRA 4 BENEFICIARIES DURATION Terminated employees 18 months Disability within 60 days of COBRA continuation 29 months Survivors 36 months Spouses who lose coverage due to divorce 36 months
CITYS MONTHLY COBRA RATES (2017-2018) ILLUSTRATION 5 EPO LIMITED MEDICAL PREMIUM* 2% TOTAL ADMIN. FEE Participant only $558.88 $11.18 $570.06 Participant & Spouse $1,285.38 $25.71 $1,311.09 Participant & Child(ren) $1,061.84 $21.24 $1,083.08 Participant & Family $1,956.00 $39.12 $1,995.12 *Rate includes contribution paid by the City and participant.
STATUS OF CITYS COBRA SERVICES 6 Effective June 24, 2014, Ceridian HCM, Inc. (Ceridian) was approved by City Council as the administrative services vendor for COBRA after a competitive bid process. At the end of 2016, Ceridian notified the City that it was no longer going to offer COBRA services in 2017. To avoid breach of contract and disruption in services for the City and other governmental entities, Ceridian continued to offer COBRA administrative services through WageWorks per the existing contract until other arrangements could be made.
RECOMMENDATION 7 Approve: An amendment to expand the scope of the current WageWorks Flexible Spending Account contract to include COBRA administrative services and transfer funds from the Ceridian contract to WageWorks effective May 1, 2018.May 1, 2018; and not exercise our fifth year option on the Ceridian contract.
