Which Benefits Continue Under COBRA? Hint: More Than You Might Expect!

You want to be COBRA compliant. You certainly don’t want to have issues stemming from an IRS audit. Compliance gets tricky, though, when you don’t fully understand which plans are eligible under COBRA. Vision? Wellness programs? Flexible spending accounts? Life insurance? The more benefits your company offers, the more complicated it gets.

To help you make sense of your COBRA obligations, here’s the information you need on various benefits.

Medical Care

When COBRA passed in 1986, it focused solely on medical plans. In the years that followed, the act was broadened somewhat. When speaking of medical care covered by COBRA, the following treatments are included:

  • Prescription drugs
  • Surgery and other major medical benefits
  • Hospital care, both inpatient and outpatient
  • Physician care
  • Dental
  • Vision

Disability, Life Insurance and Long-Term Care

These benefits are not classified as medical care and do not qualify under COBRA. Care for medical issues, such as cancer, should be continued through the health plan.

Wellness Programs

Wellness programs are not currently referred to in COBRA, so whether or not coverage continues can be tricky to determine. As a rule of thumb, if the wellness plan is part of the health plan, it should continue. If the wellness plan provides medical care, such as health screenings, it’s also reasonable to expect it to continue.

Flexible Spending Accounts

Flexible spending account benefits are covered by COBRA, and this applies to the money in the accounts, as well. Note that individuals do not need to use COBRA health insurance in order to take advantage of COBRA extensions for flexible spending account benefits.

Voluntary Benefits

Like wellness programs, this is another tricky one, but you shouldn’t assume that COBRA coverage doesn’t apply to voluntary benefits. Voluntary benefits that provide health care, as defined above, are subject to COBRA.

According to final regulation, COBRA applies to plans even if the employer makes no contribution if the coverage would not be available at the same cost without the involvement of the employer. In other words, if employees couldn’t get the benefits on their own for the same price, COBRA applies.

In the end, most—but not all—benefits continue under COBRA, and failure to comply can result in fees and lawsuits. To avoid programs, draw on the experience of expert HR and legal professionals, and stay up-to-date on the available information. To learn more about COBRA compliance, consult the Department of Labor’s guide. To learn more about how COBRA software makes the process easy, take an online COBRAGuard tour.

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