Agenda Packets - 1988/01/25 - Laserfiche WebLink

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MEMO TO: MAYOR AND CITY COUNCIL /-� FROM: CLERK -ADMINISTRATOR ( DATE: JANUARY 19, 1988 SUBJECT: COBRA REGULATIONS AND IMPLEMENTATION On the 7th of April, 1986, Public Law 99-272 of the 99th Congress which is cited as the "Consolidated Omnibus Reconciliation Act of 1985" or COBRA, became law. Under Title X, Private Health Insurance Coverage, the Law amends sections of the Internal Revenue Code, Title I of the Employee Ret•irment Income Security Act of 1974 (ERISA), and the Public Health Service Act mandating an employer sponsored and administered employee and employer paid continuing health care plan for certain employees and family members. Under COBRA, employer provided Group Health Plans must offer those "qualified beneficiaries" who would otherwise lose coverage due to a "qualifying event" the opportunity to choose whether or not they want to continue coverage under those plans. A "qualified beneficiary", is defined in COBRA as, generally, a covered employee, spouse, or dependent who has lost coverage due to an event defined by COBRA, called a "qualifying event". The coverage they receive is "COBRA Continuation Coverage" and, except for the fact that the qualified beneficiaries must pay the premiums and are entitled to a variety of statutory rights, they are treated the same as "similarly situated individuals" - those normally covered. Gene':ally, COBRA specifies that all organizations with Group Health Plans must comply with provisions of the statute with the exception of: those organizations with fewer than 20 employees; church plans; Federal Government plans. The employer is responsible for making COBRA work. There are a variety of notification requirements and the employer must collect premiums which cannot exceed 102% of the "applicable premium". If the employer fails to meet the comlex and exacting requirements of COBRA, the penalties can be devastating. Penalties for a local government jurisdiction such as Mounds View for non-compliance with COBRA requirements would include denial of th^ r_.deral tax exclusion for insurance premiums paid by an ! ar for a highly compensated individual. In the cas,, ;`:_ ;i.ey of Mounds View under these guidelines, that individual would be the Clerk -Administrator. Penalties would also include geneficimen arsatthe rate of$100.00per to the cted day for orfoaeach ed employee and qualified beneficiary for non -notification with no limit to the maximum dollar amount of the penalty.