COBRA Admin Fees

[Guest AHayhow]

Can an employer charge the COBRA premium +2% for one Qualified Beneficiary, and just the COBRA premium (without the 2%) for another Qualified Beneficiary? Thanks

[KIP KRAUS]

Employee benefit plans must operated in a manner that precludes individual selection. I say absolutely not.

[Guest stan]

Some state laws do not allow the 2% surcharge. If the plan is subject to both state and federal continuation rules, and if the two individuals live in two different states, this may explain the apparent discrepancy.

[Kirk Maldonado]

Stan:

Don't you think that state laws are preempted?

[KIP KRAUS]

Kirk:

I originally thought that as well, but it seems to me that I read some where that if state continuation of coverage laws were more favorable than COBRA law an employer was required to follow the state law.

Of course one would want to know how the state applies its regulations to contracts sitesed in their state or to employees residing in their state.

[Kirk Maldonado]

The House Committee Report on P.L. 100-667 provides as follows:

{I}f under State law the qualified beneficiaries are

entitled in one respect to greater benefits than under

the [COBRA] health care continuation rules such that

compliance with State law automatically means

compliance with the health care continuation rules, the

State law rule becomes the operative rule with respect

to that aspect.

[KIP KRAUS]

Then I guess that’s what I was referring to. So if state law didn’t allow the 2% admin. fee doesn’t that mean you follow the state law?