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We are a small company that is part of a very large PEO. We went with them primarily because of the lower medical premium rates. The PEO is partially self funded and partnered with a major Health Insurer. One employee left and their cobra rate quoted was substantially higher than what he was paying, even after adding in the company contribution. Hypothetically, he was paying $350/mo and our company was contributing $200, but his quoted cobra prem is way above $550 - far beyond the 102% allowed (around $1100). I think it has to do with the fact the the PEO is partially self insured as what we pay in medical is referred to an allocation and blended in with the combined rate for taxes, work comp, unemployment, insurance, etc. We are being told that the major Health insurer the PEO is partnered with is offering an equivalent coverage policy for cobra, despite being more expensive. My first reaction was that this in not in compliance with Cobra. Has anyone dealt with this issue before - cobra rates for self funded (or partially self funded) plans? There seems to be some ambiguity in determining the rates, it can't be that far off. Draper vs. Baker Hughes, Inc doesn't address this 100%, but still seems to point to a uniform rate for cobra recipients.
