Software defangs COBRA ahead of compliance deadline

As compliance deadline looms for DOL rules, COBRA software removes administrative sting

By Bruce Shutan

It took nearly 20 years for two sets of government-issued rules to clear up many ambiguities about how to best administer the Consolidated Omnibus Budget Reconciliation Act of 1985, known as COBRA.

But while the grip on employee benefit managers has loosened in the wake of regulatory relief from the U.S. Department of Labor (DOL), the complex benefits law largely retains its venomous sting.

On November 26 or the next anniversary date of their health plan (January 1, 2005 for calendar-year operations), employers are expected to begin complying with a DOL directive that was issued in May. The regs clarify for plan administrators what they must do and when it must be done.

Beware of silver bullet

Still, COBRA administration isn't expected to get much easier because the challenge of how to administer the law is no less daunting, cautions Scott Haines, President of OnQue Technologies, Inc., the maker of an innovative and affordable software package that streamlines COBRA administration.
He says the trouble with COBRA is that it is not only inherently complex but also "a poorly written piece of legislation that left many important issues either unanswered or so ambiguously presented that the courts have had a heavy hand in interpreting the law."
Until the Internal Revenue Service (IRS) published its proposed regulations in 1999, which were not finalized until 2001, Haines notes that clarification of the law came more from the nation's judiciary than from the regulatory agencies. Much of the case law involving COBRA since 1985 is now incorporated into both the IRS and DOL regulations.
Highlights of the new DOL rules include new minimum notification and language requirements; changes to the way disability extensions are handled; clarification of time periods and to whom notifications must be sent; and new options for employers to protect themselves by including specific language in their COBRA notifications.

Easier to administer

The alphabet soup of complex employee benefit law has burned through considerable time and money in countless HR and benefit departments that are expected to know and apply any number of federal rules as an integral part of plan administration.
COBRA in particular is "riddled with critical time periods to obey and convoluted calculations that must be made to stay compliant," observes OnQue Technologies CEO Bud Martin. "These challenges can result in clerical errors that are very easy to make, yet can have devastating consequences. To make matters worse, the law has been amended 11 times – making it critical to keep up with new administration methods and proper notification language."

The good news is that there's relief for long-suffering COBRA administrators, regardless of their command over the finer points of this landmark legislation. Since its 2001 release, more than 4,600 units of COBRA OnQue have been shipped to employers of all sizes throughout the U.S.
What attracts HR administrators to this unique software package is its built-in COBRA expertise. Alberta J. Priest, president of AMP Consultants in Albuquerque, N.M., says "COBRA OnQue is without a doubt the easiest COBRA administration software I have ever used. There is a logical sequence to the program and anyone familiar with Windows Explorer will recognize the file system. In addition, the extensive information section is accurate, up to date and complete."

Martin believes software is the ideal tool for administering COBRA quickly and accurately. But he's also quick to interject that competing COBRA packages are primarily legacy recordkeeping systems that require a keen understanding of the law's administrative requirements for them to be useful.
COBRA OnQue, however, incorporates a formidable and affordable level of expertise as well as ease of use for a speedy solution that the company says is unmatched in the marketplace. The system also is more efficient and less expensive than outsourcing (which many HR administrators mistakenly deem less time consuming), keeping total control of the process in the hands of the employer where Martin says it belongs.
"By incorporating COBRA's rules into the software and asking the pertinent questions in language that is understandable to HR personnel," he explains. "COBRA OnQue enables even the novice to feel comfortable in the administrative role and provides the employer with consistent results."

Instant ROI

For the few hundred dollars the product costs each year, Martin notes the return on investment is "quickly recouped through increased administrative efficiency," especially when viewed in the larger context of avoiding costly IRS excise taxes, statutory penalties and civil litigation filed by employees whose rights to health insurance coverage have been violated.
Now that official guidance is available from the IRS and DOL, he expects both regulatory agencies will take a much tougher stand enforcing the law. And with a compliance deadline just around the corner, now is the time to heed his clarion call.

Bruce Shutan, former managing editor of Employee Benefit News, is a freelance writer based in Los Angeles.

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