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What is Cobra?
What happens to employees’ medical, dental, and vision insurance when they separate from your company?
COBRA–or the Consolidated Omnibus Budget Reconciliation Act–gives former employees the right to extend their insurance for a limited amount of time under certain circumstances, like voluntary or involuntary job loss, a reduction in hours.
How Does Justworks Help with Cobra?
Justworks is here to help you take care of all employees, even former employees, so we’ll automatically send enrollment packets to eligible employees when they voluntarily or involuntarily separate from your company. Healthcare and continued coverage is so important, especially when former employees are in the middle of a job transition.
Justworks does not charge extra for COBRA administration.
COBRA eligible employees can continue coverage for up to 18 months and sometimes more depending on the state and qualifying events. Qualified employees may be required to pay 100% of their premium to extend their coverage as well as a 2% fee.
What is the process for starting COBRA?
Our partner Wageworks, formerly Health Equity, will send a COBRA enrollment packet to each former employee. The packet will arrive about 10-14 days after the employee’s separation date. Employees may get started with enrollment before the packet arrives. Our list of COBRA-eligible employees is sent every Monday, and Health Equity will process the enrollments within 1-2 business days. As long as the packet has been mailed, employees can go to mybenefits.wageworks.com and use their social security number to create their account and get started.
Benefits through Justworks terminate at the end of the month. So, if an employee separates in the middle of the month, their COBRA enrollment would take effect on the 1st of the following month.
For example, let’s imagine an employee that separates from the company on May 12th. Their existing benefits will continue until May 31st. If they want to continue their coverage with COBRA, they’ll be able to do that on June 1st.
It is important to note that employees aren’t automatically enrolled in COBRA. Their COBRA coverage isn’t active until they pay their 1st premium.
Employees might end up joining an insurance plan with a new employer or explore options in the Health Insurance Marketplace. It’s really up to them to weigh their options and decide if they want to participate or not. Employees aren't able to switch plans when they enroll in COBRA. They’ll keep the same plan they had when they separated. They can remove dependents, but they can’t add any that weren’t already covered when they separated.
Employees must enroll within 60 days of their last day of employment. Coverage will be retroactively dated to the 1st of the following month in which they were separated, so any eligible claims that they've incurred in that interim could be covered through the carrier once they successfully enroll.
Can I pay for an employee’s COBRA insurance?
Your company can choose to support former employees by helping to pay all or a portion of their medical, dental, and vision premiums for a period of time. This is what’s known as employer-paid COBRA severance.
Contact support to initiate the process of employer-paid severance. You can e-mail us at support@justworks.com or call us at (888)534-1711.
You have the option to cover medical, dental, or vision, or all the plans. It’s up to you. You can either cover 100% of the premiums or a flat dollar amount. You can also choose to cover the 2% COBRA administration fee if you would like to. We’ll ask for some information about the separated employee, the length of time that you would like to pay into COBRA, and the amounts you want to pay.
Next, Justorks will create what's known as an Employer COBRA Contribution Agreement. This agreement authorizes Justworks to charge you for some or all of the COBRA premium, outlines the start and end dates of the COBRA coverage, the amount the employer will pay, and whether the company will pay the 2% administrative fee. This agreement needs to be signed by the separated employee and the employer.
Then, we’ll submit it to WageWorks to process, and the employee will see that their premium has dropped by whatever amount you’ve elected to cover. It typically takes around 7 to 10 business days to get this processed.
For more detailed information please visit our Employer-Paid COBRA Contributions with Justworks article.
Can I transfer employees who were enrolled in COBRA before my company joined Justworks?
Yes. We’ll help you transfer those employees onto WageWorks with your new medical, dental, and vision policies.
We prepared a guide that you can use to let folks know they are now eligible to enroll in the plans your company is offering through Justworks. Check the link in the description to download the guide. guide in the links below. Employees will share information about enrollment with Justworks. We’ll then process the transfers and then WageWorks will send out a COBRA packet in the mail.
Companies have 45 days from their benefits effective date on Justworks to provide all the information required to transfer their COBRA population onto Justworks policies.
Employees need to cancel COBRA when they are hired
If employees are using COBRA when they are hired or otherwise get other health coverage, their COBRA coverage will not automatically be cancelled when they enroll in health insurance plans through a new employer.
Sometimes we see that employees using COBRA coverage from a company previously on Justworks are rehired at another company using Justworks. If this is the case, WageWorks will not automatically cancel their COBRA coverage either.
The employee can submit a support request to WageWorks anytime to cancel coverage
What happens when a company leaves Justworks?
Companies are still responsible for providing health insurance options to employees even when the company is no longer usingJustworks. This means transferring any employees that are on COBRA to your new provider.
In most cases, we’ll charge a fee for the continued administration of COBRA if companies do not transfer their COBRA participants onto a new COBRA provider within sixty days of the company’s final active date on Justworks.
Medical, dental, and vision benefits administration will be terminated on the last day of the month the company is active with Justworks. All employees that were on benefits through Justworks when the company terminated will receive a COBRA enrollment opportunity. If employees have enrolled in COBRA and don’t get insurance through another provider within 60 days after a company leaves Justworks, the company will be billed $400 per month per enrollee, which includes both employees and their dependents.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.