DON’T LET RECORD-KEEPING REQUIREMENTS GET LOST

There may not be specific record-keeping requirements written into each law, but knowing what papers to hang onto - and for how long to keep them - should still be high priority for employers. For practical purposes, having your benefits documents in order could prevent you from possibly having to double your efforts down the line.

For legal reasons, it can be your saving grace if an employee cries foul in court.

Keeping COBRA Papers In Order

COBRA does not specify any particular record-keeping requirements, but employers would be wise to hang on to documents which can help defend against COBRA non-compliance claims. Consider keeping the following:

-- COBRA election forms, claim forms, letters rejecting COBRA coverage. Any notification documents sent to employees and beneficiaries.

-- Any COBRA-related correspondence sent by employees and beneficiaries.

-- List of employees covered by your group health plan.

-- Records of terminations, reductions in hours, leaves of absence, and/or deaths of employees covered by the group health plan.

-- The Medicare eligibility of covered employees.

-- Disability status of covered employees. List of retirees covered by group health plan.

-- Current addresses of employees or anyone receiving COBRA benefits.

-- Written acknowledgements from employees and qualified beneficiaries that they received notice of their COBRA rights.

-- Records of COBRA premium payments made by employees.

-- Records of any changes made to your group health plan. Method used to calculate COBRA premiums.

-- List of employees denied COBRA coverage, along with reasons why they were denied coverage. 

Most experts agree that retaining these records (in a DB on your computer or even on a system of 3x5 cards and yellow pencils) for one year after the election period ends (if the employee waives his/her continuation coverage) or continuation coverage ends (if the employee chose to continue coverage) should be sufficient.

Important COBRA Dates

These are important COBRA dates, which should be found somewhere in the COBRA records you keep. Use this list to do a quick audit of your files:

-- Date a qualifying event occurred, and what it was.

-- Date election period ends.

-- Date of election.

-- Date coverage terminates if COBRA continuation coverage is not elected.

-- Date maximum coverage period ends. Dates of payments due, and amounts due.

-- Dates grace periods end.

-- Date COBRA coverage ends.

Maintaining ERISA Records Right

Under ERISA, employee/beneficiary records relevant to benefits must be kept for the duration of plan participation. Summary Plan Descriptions (SPD) and other records supporting plans or reports, including vouchers, worksheets, receipts, and applicable resolutions, must be kept for six years after the filing date of documents.

Don’t forget to include this information in your SPDs:

-- Name of the plan, and if different, the name by which the plan is known to its participants and beneficiaries

--. Name and address of employer.

-- Employee identification number (assigned by the IRS). Type of pension or welfare plan involved. Type of administration of the plan (e.g., contract administration, insurer administration, or joint board of trustees). Plan administrator’s name, business address, and business telephone number.

-- Name of the person designated as agent for service or process and the address where process may be served on that person. The plan’s participation and benefits eligibility requirements. In the case of pension plans, a statement describing any joint and survivor benefits provided under the plan, including any requirement that an election be made as a condition for accepting or rejecting the joint and survivor annuity.

-- Circumstances that may result in disqualification or ineligibility or denial, loss, forfeiture, or suspension of any benefits, plus any plan provision relating to forfeiture of benefits, breaks in service, and eligibility for participation and benefits.

-- Provisions for determining years of service of eligibility to participants, vesting, breaks in service, and years of participating for benefit accrual, plus the number of years of service required to accrue full benefits and how benefits are prorated for partial years of service.

-- Sources of contributions to the plan (employer and employee), and how contribution amounts are calculated.

-- Identity of the funding mechanism (employee stock ownership plan) used to accumulate assets through which benefits are provided.

-- Date of the end of the plan’s fiscal year.

HIPAA Files To Have On Hand

Under HIPAA, plans must provide a written certification of all prior coverage and any waiting period under the plan automatically to employees who lose coverage under a plan, and when they can elect COBRA continuation coverage.

For automatic certificates, the period of health care coverage which must be shown on the certificate is the last period of continuous coverage ending on the date the employee’s coverage ended. Automatic certificates must be furnished within the following time frames.

For employees who are qualified beneficiaries entitled to elect COBRA, certificates must be provided no later than when a notice is required to be provided for a qualifying event under COBRA (usually 14 days).

For employees who lose coverage under a group plan, and who aren’t entitled to elect COBRA, certificates must be provided within a reasonable time after coverage ceases. (Typically, this applies to small employers which aren’t subject to COBRA.)

This requirement is satisfied if certificates are provided by the time a notice must be provided under a state program similar to COBRA. For people who are qualified beneficiaries and have elected COBRA, certificates must be provided within a reasonable time after COBRA ends, or, if applicable, after any grace period for the payment of COBRA premiums expires.

Employees (and their dependents) may also request certificates (i.e., requested certificates). Requests must be made within 24 months after employees lose coverage under a plan. Certificates must be provided at the earliest time that a plan, acting in a reasonable and prompt fashion, can provide them. 

Plans must establish a procedure for employees to request and receive certificates. Requested certificates must reflect each period of continuous coverage ending within the 24 months prior to the date of an employee’s (or dependent’s) request.

Certificates may be mailed by first-class mail to employees’ last known addresses. Certificates for employees’ spouses who have different addresses than employees must be mailed to the spouses’ homes.

In general, both a group health plan and an insurer must furnish certificates of creditable coverage. Duplicate certificates aren’t required. So, for example, a group plan meets this burden if it and its insurer agree that the insurer will issue the certificates. Employees and their dependents are entitled to certificates.

One certificate may contain information on employees and dependents, if the information is identical for everyone. If information isn’t identical, information may still be combined (but separately stated) in one form.

If a plan does not know who employees’ dependents are, or dependents’ coverage information, it must use reasonable efforts to determine the information needed for dependents’ certificates. Note: Certificates don’t have to be issued until a plan knows (or, after making a reasonable effort, should know) that dependents no longer have health coverage.

Prior to June 30, 1998, a group plan which could not provide the names of dependents (or their coverage information) in order to furnish them with certificates, were able to simply give the employee’s name and specify that the type of coverage described in the certificate was for dependent coverage (e.g., family coverage or employee-plus-spouse coverage.

That changed. A group plan is no longer allowed to issue certificates of health coverage without full information about an employee’s dependents. After June 30, 1998, group plans must list each dependent by name and identification number.

Certificates of prior coverage must be in writing and include the following information: the date the certificate is issued; the name of the group health plan that provided the coverage described in the certificate; the name of the employee or their dependent; other information necessary for the plan providing the coverage specified in the certificate to identify the personal (the employee’s identification number under the plan and the name of the employee if the certificate is for, or includes, a dependent); the name, address, and phone number of the plan administrator required to provide the certificate; the phone number to call for further information regarding the certificate (if different); either:

1) a statement that an employee has at least 18 months of creditable coverage, not counting days of creditable coverage before a significant break in coverage; or

2) the dates any waiting period and creditable coverage began; and the date creditable coverage ended, unless the certificate indicates that creditable coverage is continuing as of the date of the certificate.

A Word About SPDs

Plans covered by ERISA must provide participants with a summary description of any "material reductions in covered services or benefits" no later than 60 days after the effective date of the reduction. A reduction in benefits or services includes a modification which: eliminated or reduces benefits; increases deductibles, co-payments, or other amounts; reduces a health maintenance organization’s (HMO) service area; or establishes new conditions or requirements (pre-authorization requirements) to obtaining services or benefits.

HIPAA also requires that information in summary plan descriptions concerning the insurers’ responsibility for plan administration and financing must be more detailed than previously required. SPDs must also reflect an updated model statement which informs employees about their ERISA rights. If employees have any questions about this statement or about their rights under ERISA, they should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

April 24, 2008