THE INSURANCE CARRIER & COBRA ADMINISTRATION
The Challenge
How to solve the COBRA compliance problem
Since the inception of COBRA regulations, insurance carriers have followed three traditional courses of action when it comes to supporting employer customer’s COBRA compliance efforts.
- Do nothing since it is an employer law.
- Contract with a company, like COBRAServ, to provide turnkey “back office” services to employer customers.
- Develop an internal hybrid solution with varying levels of carrier involvement in the administration process.
COBRApoint is introducing to group insurance carriers a fourth option that changes the game, is less costly to implement and will not distract Kaiser Permanente from focusing on your valued employer customers.
Let’s examine the three courses of action in more detail. First, doing nothing to support the employer in their compliance efforts has direct and significant costs to the insurance carrier’s group plan. National surveys continue to reveal COBRA claimant’s average 156% higher claim costs than active plan members. Which begs the question, how many COBRA participants are covered under a plan you underwrite that should not be there? Also, there are soft costs associated with lost new business opportunities due to perceived inequalities between carriers offering a COBRA solution versus ones that do not.
Second, employing the COBRAServ “back office” model is expensive. On average, the ‘per insured member capitation’ rate is between $0.60 and $0.75 per month. Compounding this are the costs associated with loss of goodwill when the COBRA administration provider’s service standards slip creating a negative experience for the employer customer. A problem with COBRA administration often bleeds on to the insurance carrier since they were the driver in this business relationship.
Third, many insurance carriers have developed an internal COBRA administration unit to provide COBRA services for their employer customers. Some carriers, like Aetna, will handle 100% of the compliance process for certain large employer customers. While others, like Mutual of Omaha, simply process the monthly COBRA premium payments. Under this strategy, the insurance carrier’s increased liability exposure and costs are very real and substantial.
The Solution
Equip the employer customer with the tools to comply with COBRA
The Benefit
The change the game story
The Technology
Application Service Provider
About the Company
COCO Development, LLC
COCO Development, LLC, provides cutting-edge, business-to-business solutions that facilitate and streamline the complex tasks of managing human resource functions. All COOC Development solutions are accessible in an Application Service Provider environment. Employer customers may access tier-1 technology solutions without significant capital investments or computiong infrastructure reconfiguration
Founded in 2003, COCO Development is being recognized as a leader in innovative HR compliance process applications. Every member of the development and management team has amassed in depth technical and practical knowledge about COBRA compliance administration and instills every facet of COBRApoint with this collective knowledge. For more information, visit www.cobrapoint.com.