CLAIMS EXPOSURE DROPS 25% WITH OUTSOURCED COBRA ADMINISTRATION
Two years ago USAdmin Services was selected to provide outsourced COBRA administration services for a mid-market employer, supplanting the COBRA administration efforts of the client’s Human Resources department. At the time there were between five and seven individuals involved in the administration of COBRA including employees in both H. R. and Finance. Duties were divided so that the finance department was responsible for the receipt of health insurance premium payments and H. R. employees handled notices, enrollments, terminations and questions from COBRA qualified beneficiaries.
This client employed approximately 7,000 individuals with about 5,500 subscribers to their medical insurance and 3,800 subscribers to the dental plan with an annual employee turnover rate in excess of 100%. The employer was using Microsoft Excel to support their administration of COBRA and had 235 COBRA participants. It was estimated that the total COBRA administration effort consumed the time of between three and four full time employees including supervision. It is important to note the dedication of these individuals who would frequently take the COBRA spreadsheet home so that they could manually update the record for required additions, terminations and changes.
Management realized that the company needed better controls over COBRA and during the initial meeting cited three main objectives for COBRA administration. In order of importance they were:
to achieve compliance with state and federal COBRA laws and regulations,
to minimize claims costs of COBRA participants and
to optimize the costs of COBRA administration.
Over the first eight weeks the group and USAdmin worked to develop, test and put into production a computer program that would extract the data required for a qualifying event notice from the group’s human resources information system and would format that data so that it could be electronically transmitted to USAdmin. A twice a month schedule for these downloads was established and the first file was sent. At the end of the eighth week the new electronic transmission program was put into production and paper forms for qualifying events were no longer required.
Meanwhile, the issue of initial notices was being addressed. The group had never sent initial notices to their employees. A procedure was established for completing initial notice information on paper forms during employee orientation held in regional offices. These are then consolidated in the corporate headquarters and sent periodically to USAdmin for processing. USAdmin provided the group administrator with a compliant initial notice letter in electronic format which was sent to all current employees and their families.
After fifteen months what are the results of the decision to contract with USAdmin Services for COBRA administration? All three of the original goals have been met.
1. The employer is in compliance with state and federal COBRA rules and regulations with all notices being sent within one business day of their receipt at USAdmin’s office.
2. Second, claims costs from COBRA participants have been minimized by strict application of COBRA requirements for enrollment, premium payment and termination upon the expiration of COBRA eligibility. In fact, COBRA participation has been reduced by 25% while the number of employees who are subscribers to the health plan has increased by 6%.
3. Third, the client’s cost of administration has been optimized with finance and human resource personnel freed from COBRA administration tasks and focused on tasks that directly support the client’s business.
To learn more about our money saving COBRA administration services and what a 24-hour turnaround can do for you, please contact us at:
USAdmin Services, LLC
701 Cherokee Blvd, Ste 201
Chattanooga, TN 37405