COBRA premium calculation - info to participant

[waid10]

Hi.  What information must be disclosed to a COBRA participant regarding calculation of premium?  We have a participant that wants detailed information about what makes up the premium.  He is asking for information about what costs/fees/etc. go into the premium calculation.  Typically we have explained that the COBRA premium is based off of the health plan premium for the coverage selected.  It is 100% of that amount plus a 2% admin fee.  He wants to know what goes into the health plan premium.  My thought is that the insurer has set the premium amount; and he or any participant can elect to coverage and pay that amount, or decline coverage.  But he wants very detailed information about what does into the premium amount.  What are we (the employer) legally required to provide?

Thanks.

[hr for me]

Are you self-funded?  Or group-based?  You might have more liability if you are self-funded to disclose since the employer is helping to calculate the premium...But I know of nothing you have to provide on the small group level. And I can't say I have ever had an employee ask this level of detail.

There are articles like this: https://framework.gusto.com/how-are-health-insurance-premiums-calculated/  that talk about claims area, age, smoking of the group and richness of benefits, but I don't think he wants that.  To tell the truth it sounds like he wants the actuarial calculations and I don't think that is reasonable and not something the insurance company would share with anyone but the State Insurance Dept to get the plan approved to be sold. Does he know that insurance companies have to do that? 

Sometimes there is no pleasing people like this.  Plus does he not realize that he is going to have the same costs for any insurance policy he buys unless he goes with a co-op coverage like MediShare. Because he lives in the same place, is the same age and is either a smoker or not and then gets to choose the richness of his individual coverage.  The only real difference is the employer will not be subsidizing part of it (but the gov't might)

[waid10]

5 minutes ago, hr for me said:

Are you self-funded?  Or group-based?  You might have more liability if you are self-funded to disclose since the employer is helping to calculate the premium...But I know of nothing you have to provide on the small group level. And I can't say I have ever had an employee ask this level of detail.

 

We are self-funded.  I think he wants a breakdown of any and all fees/costs that make up the premium amount.  We have never provided that level of detail to a participant.  But I want to make sure that there isn't some requirement to provide it.

[leevena]

I do not keep up with this issue very much so it may have changed, but I do not believe so.  The regs require you provide the total cost, not the specifics that go into the calculations. 

[Chaz]

This is definitely something you should speak with counsel about and not go alone.  There is case law all over the board regarding disclosure requirements and you need someone to carefully review the actual participant request.

[leevena]

Chaz, thanks for the post.  To my knowledge, the employer calculates a cobra cost, hopefully with the help of an actuary, and provides that number(s) to the beneficiary.  What case laws are you referring to?

[Chaz]

I was referring to the document production requirements under ERISA Section 502.  Courts are all over the place with respect to which documents a plan has to produce pursuant to a participant's request.

 

[leevena]

Thanks, appreciate the help.