COBRA Administration Terms & Conditions

Published: 10/26/2020

This Appendix is subject to all the terms and conditions of the Client Services Agreement (the “Agreement”) and the applicable order form (“Order Form”), by and between Client and Benefitfocus and provides a description of the services for the ongoing COBRA administration (the “COBRA Administration”). Benefitfocus and Client are each individually a “Party” and collectively the “Parties”.

Definitions:
1. Capitalized terms that are not defined in this Appendix shall have the meanings set forth in the Agreement:
  1. “Accountable Mail” means mail that provides documented proof that the letter or notice was mailed to the recipient at the recipient’s address and meets COBRA regulatory requirements but does not mean that delivery is tracked.
  2. “Bank” means the bank selected from time‑to‑time to be the depositary bank for premium payments.
  3. “Business Days” mean Benefitfocus business days, which exclude weekends and Benefitfocus holidays.
  4. "Carrier" or “Carriers” mean an insurer or health plan or other vendor of Client.
  5. “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the related regulation and interpretations by the Department of Labor and the Internal Revenue Service.
  6. “COBRA Application” means a web based application designed to enable the Client or COBRA Continuant to manage and process daily administrative obligations associated with COBRA.
  7. “COBRA Continuants” means qualified beneficiaries electing COBRA continuation coverage.
  8. “COBRA‑Eligible Plan” means one or more benefit plans that are subject to COBRA, including, but not limited to, medical, dental, vision, employee assistance plan, health flexible spending arrangement, and/or health reimbursement arrangement benefits a Client has established for its employees.
  9. “Covered Employee” or “Member” means an employee that has enrolled in the employer’s COBRA‑Eligible Plan(s).
  10. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
  11. “For the Benefit of” means a bank account that is used for processing premium payments for the benefit of COBRA Continuants or Client at the request of Client.
  12. “Qualifying Event” shall have the meaning given under COBRA.
  13. “Services” shall mean the COBRA Administration provided defined therein.
COBRA Administration:
1. Benefitfocus Responsibilities for COBRA Administration: Benefitfocus agrees to provide COBRA Administration described below on behalf of, and at the direction of, Client and its Covered Employees in exchange for the payment set forth herein
2. COBRA Administrative Implementation Services:
  1. Benefitfocus will setup Client in the COBRA Application using the COBRA Program Design Guide developed and mutually agreed upon as part of the design and implementation of the Services.
  2. Benefitfocus will provide standard instructions to Client regarding Client responsibilities. Implementation includes:
    1. Initiation and planning, including sales transition meeting and project kickoff.
    2. Discovery, including completion of the Benefit Design Guide and Client signoff.
    3. COBRA Application configuration of five (5) divisions and enablement of the standard Benefitfocus file‑based data transmission from the COBRA Application to Client’s applicable carriers. Additional divisions will require further pricing and scoping and an additional writing signed by the parties.
    4. Quality assurance testing and production deployment.
3. Employee Data Management:
  1. Benefitfocus will complete initial employee set up and ongoing maintenance of all COBRA Continuants and Covered Employees on the COBRA Application.
  2. Benefitfocus responsibilities for administering Covered Employee data management services will be dependent on the receipt of timely and accurate information from Client, including but not limited to plan designs, plan rates, and Qualifying Events.
  3. Benefitfocus will provide Technical Services and Data Quality Support – technical and data maintenance teams, to manage technical aspects of Client’s relationship with Benefitfocus.
4. COBRA Notifications: Upon receipt of data from Client which indicates a status change causing a Qualifying Event, or a new hire enrollment into a COBRA eligible plan, Benefitfocus will send via Accountable Mail, within the applicable time frame required by the COBRA provisions of ERISA, or upon the effective date of coverage where applicable, the notifications outlined below. Notifications will be configured during implementation of COBRA Services, including standardized Benefitfocus branding, and provided in standardized format and language:
  1. Initial Notices (“General Rights Notices” as defined in COBRA) will be sent within the timeframe required by COBRA to newly Covered Employees and spouses informing them of their rights under COBRA.
  2. A COBRA Specific Rights Notice, including instructions for COBRA continuation election, will be sent within the timeframe required by COBRA to all Covered Employees who have a Qualifying Event.
  3. The timeliness of sending notifications is contingent on receiving timely, accurate and complete eligibility, qualification and status data per the process and format agreed upon for automated load into the COBRA Application. If complete information is not received timely from Client, Benefitfocus will send the notices described in this Section as soon as administratively practicable after receiving the required information. If information from Client is not complete or is incorrect, such notices may be incomplete or incorrect.
  4. If purchased by Client, Initial Notices (General Rights Notices) may be sent to all Covered Employees and spouses at the Target Go Live Date as noted in the Order Form, at the rate identified herein.
  5. Notifications beyond the scope of this Section require further pricing and scoping and an additional writing signed by the parties.
5. COBRA Continuation:
  1. Benefitfocus will mail standard payment coupons to COBRA Continuants after COBRA continuation coverage is elected.
  2. Benefitfocus will send standardized forms and letters to communicate with COBRA Continuants concerning premium rate and benefit changes, COBRA continuation coverage eligibility status, Medicare eligibility, advance‑termination notice for the individual conversion, and verification of termination of COBRA coverage.
  3. Benefitfocus will provide online access to information related to the status of Qualified Beneficiaries and COBRA Continuants.
  4. Benefitfocus will notify a COBRA Continuant if COBRA coverage terminates earlier than the end of the maximum period of coverage applicable to the Qualifying Event that entitled the individual to COBRA continuation coverage. The notice will be provided as soon as administratively practicable after Benefitfocus determines that the COBRA continuation coverage will be terminated early.
  5. Benefitfocus will extend the maximum COBRA continuation coverage period in cases of disability and second Qualifying Events as allowed under COBRA when notified by COBRA Continuants
  6. Benefitfocus will provide its standard system generated open enrollment/premium rate change letter during open enrollment. Quotes can be provided for custom open enrollment materials, which require further scoping and pricing and an additional writing signed by the parties.
6. Premium Payment Processing and Services:
  1. Benefitfocus will collect valid and timely premium payments (including any administrative charges and/or convenience fees) from or on behalf of COBRA Continuants, employing postmark date aware, “lock‑box” payment processing services for paper payments made by mail, online payment processing made through the COBRA Application by credit/debit card or ACH, and recurring ACH payment initiation and processing.
  2. Benefitfocus will, for the purpose of collecting premium payments made by paper documents and sent by mail to the Benefitfocus‑assigned post office box (P.O. Box) on all Business Days, receive mail from the post office box, collect paper checks, remittance coupons, correspondence, or other paper documents, and scan or otherwise convert such paper documents into electronic formats for the purpose of tracking and posting payments.
  3. Client hereby grants Benefitfocus agency authority to accept, endorse and deposit checks or money orders in Client’s name on behalf of Client, and for the purpose of collecting premium payments made through the COBRA Application by credit card or ACH debits of the bank accounts of COBRA Continuants.
  4. Benefitfocus will charge an additional online processing fee to credit/debit card payment methods, to the extent permitted by law and the applicable credit card operating rules and regulations. This fee will be payable by COBRA Continuant.
  5. Benefitfocus will initiate scheduled monthly ACH transactions for those COBRA Continuants who request automated payment collection through the COBRA Application Member Portal or via form.
  6. Benefitfocus will deposit all valid and timely payments received into one (1) designated bank account “For the Benefit of” Client.
  7. Benefitfocus will remit to Client the COBRA premium payments paid by COBRA Continuants, less administrative fees, on a monthly basis via deposit into a single checking account. Additional bank account setup requires further scoping and pricing and an additional writing signed by the parties.
  8. Benefitfocus shall consider a payment timely if it is delivered to the designated P.O. Box, postmarked by the U.S. Postal Service, sent by express delivery service (with evidence thereof), or made through the COBRA Application, within timeframes for timely payments defined within the COBRA Application.
7. Administration in Accordance with Law:
  1. Benefitfocus will administer COBRA services in accordance to applicable laws and regulations.
  2. Benefitfocus has no responsibility or duty with respect to any plan that is not indicated by the Client as a COBRA‑Eligible Plan. Benefitfocus’ responsibilities and duties with respect to COBRA are limited to those expressly provided in this Appendix.
8. Member Call Center:
  1. Includes support of customer service calls and customer inquiries related to COBRA benefits.
  2. Call center hours are 8 a.m. to 8 p.m., Eastern Standard Time Monday through Friday (Business Days only).
  3. Call center operations team will be trained to have proper knowledge to be able to answer questions regarding the COBRA Administration.
9. Responsibilities:
  1. Benefitfocus will support the browsers in accordance with the then‑current list located at: www.benefitfocus.com/support/browsers.
  2. Client shall provide complete demographic and benefit information to Benefitfocus for Client’s current Covered Employees, Qualified Beneficiaries and COBRA Continuants on or by the date agreed upon during the implementation process for the Client.
  3. Unless directed otherwise by Benefitfocus, Client will provide notice of a Qualifying Event by providing an electronic file or via direct entry within the Benefitfocus Benefitplace. Client is solely responsible for determining whether an employee, spouse or dependent has experienced an initial Qualifying Event under the COBRA‑Eligible Plan and the date of the Qualifying Event. Client will notify Benefitfocus of a second Qualifying Event should Client be notified of a second Qualifying Event that occurs with respect to an employee, spouse or dependent within five (5) calendar days.
  4. Benefitfocus will hold Client responsible for reconciling Carrier billings with the online reports provided by Benefitfocus through the COBRA Employer Portal. Benefitfocus shall not be liable for paying any loss or damage (including premiums) to Client with respect to any retroactive termination of COBRA coverage, provided that Benefitfocus has performed in accordance with this Appendix. Benefitfocus reserves all rights to decline to implement any retroactive changes in premium rates beyond thirty (30) calendar days if rate change notification is received after the notification period expected per Section II. I 5. below.
  5. Benefitfocus will hold Client responsible for selecting a determination period and establishing and advising Benefitfocus of the applicable premium rates to be charged for COBRA continuation coverage. Client must notify Benefitfocus in writing at least sixty (60) calendar days in advance of the applicable billing date of any changes in premium rates affecting COBRA coverage under the plan and at least sixty (60) calendar days in advance of the applicable billing date of any changes in premium rates during an open enrollment period.
  6. Client will be responsible for differences in premium payments when notification of premium rate changes is not provided to Benefitfocus at least sixty (60) calendar days in advance, causing payments made by COBRA Continuants to be incorrect for the new determination period.
  7. Client will be responsible for fees incurred by Benefitfocus for any returned checks or ACH transactions, either from Client or COBRA Continuant.
  8. Client shall advise Benefitfocus of any changes in the benefits and options provided by the COBRA‑Eligible Plan.
  9. Client will be responsible for complying with the Patient Protection and Affordable Care Act (“PPACA”) of 2010, including but not limited to any required reporting for COBRA participants, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Internal Revenue Code (the “Code”), and other applicable laws and regulations, other than those specifically governing the COBRA Administration provided by Benefitfocus hereunder.
  10. Client will maintain and provide written internal compliance procedures used for notifying Benefitfocus of a newly Covered Employee, spouse or dependent, a Qualifying Event, a report of terminations for each tax year, or when there are premium rate and benefit changes in the event of an IRS or any third party audit.
  11. Client will provide Plan and benefit descriptions (e.g., Summary of Benefits and Coverage, Summary Plan Description and benefit plan booklets, etc.) to qualified beneficiaries during open enrollment.
  12. Client will be solely responsible for maintaining and providing the following information in the event of an IRS or any third party audit: written internal compliance procedures used for notifying Benefitfocus of a newly Covered Employee, spouse or dependent, a Qualifying Event, a report of terminations for each tax year, or when there are rate and benefit changes.
  13. Client will provide the release of any information reasonably necessary for COBRA compliance and administration under this Appendix.
  14. To the extent that the Target Go Live Date noted in the Order Form is the same as the applicable plan year start date, Client will work with previous administrator to manage and administer open enrollment efforts including, the mailing of plan documentation and receipt and record keeping of enrollment changes for the upcoming plan year. If Client expects Benefitfocus to manage and administer such open enrollment efforts, further pricing and scoping via a subsequent contract signed by the parties is required.
10. Client acknowledges and agrees that:
  1. Benefitfocus will have no duty with respect to the funding of premiums by Client or COBRA Continuants.
  2. Benefitfocus will not be liable for paying any premiums of a Qualified Beneficiary to Client to the extent that Benefitfocus did not receive the corresponding payment from the Qualified Beneficiary, Client or third party.
  3. Benefitfocus will not be liable for any failure of Client to remit to the Carriers of the plan any funds that Client receives from Benefitfocus.
  4. Benefitfocus will not be liable for any failure of Client to reconcile its Carrier billings to online reports provided by Benefitfocus through the COBRA Application.
  5. Benefitfocus will not be liable for any retroactive premium rate changes requested by Client.
  6. Benefitfocus will not be responsible for failure of delivery of any notice mailed by Benefitfocus using the Qualified Beneficiary information provided to Benefitfocus by Client.
  7. Benefitfocus will not be responsible for any loss or damage suffered by any COBRA Continuant, Client or plan, should Benefitfocus fail to give a required notice or a complete notice because Benefitfocus did not receive notice of an event for which a notice was required, Benefitfocus did not receive complete information or Benefitfocus received incorrect information.
11. Carrier Notifications:
  1. Benefitfocus’ standard practice is to notify the applicable Carrier of a Qualified Beneficiary’s enrollment in changes to, or termination from, COBRA coverage (“Carrier Notifications”). If Client instructs Benefitfocus instead to send all such Carrier Notifications to Client or to a third party other than the Carrier, Client (a) shall provide the Carrier such updates in a timely manner; and (b) is liable for any fees associated with providing such Carrier Notifications.
Additional Terms and Conditions:
1. For the COBRA Administration:
  1. Client is solely responsible for reconciling its Carrier billings to its active COBRA Continuants for periods prior to the Effective Date of this Appendix and to communicate any such changes to the applicable Carriers.
  2. Client will be solely responsible for the review and payment of all claims under the Client benefit plan and ERISA, including, without limitation, claims for benefits under the Client benefit plan.
  3. Client will review and be responsible for the payment of all claims under the Plan and ERISA, including, without limitation, claims and appeals for benefits and claims and appeals for eligibility determinations under the plan. Benefitfocus is not responsible for receiving or reviewing claims for benefits under the plan and will not be liable for the payment or funding of any claims for benefits in connection with the plan, including, without limitation, where sought as damages in an action against Client or the plan, or for any activity or occurrences prior to the Effective Date of the Order Form, provided that such failure did not result from the services performed by Benefitfocus in accordance with this Appendix.
  4. Benefitfocus will not be responsible for any loss or damage suffered by any participant, continuant, the Client or the Client benefit plan, should Benefitfocus fail to give a required notice because Benefitfocus did not receive notice of an event for which a notice was required or the proper address to which the notice was to be sent.
  5. Benefitfocus will not have a duty with respect to the funding of premiums by Client or qualified beneficiaries who elect COBRA.
  6. Benefitfocus will not be liable for paying any premiums of a qualified beneficiary to any party other than the Client.
  7. Benefitfocus will not be liable for any failure of Client to remit to the insurers or third party administrators of the Client, the benefit plan funds that Client receives from Benefitfocus.
  8. Benefitfocus will not be liable for any failure of Client to reconcile its carrier or third party administrator billings to online reports provided through the COBRA Application.
  9. Benefitfocus will not be liable for any failure of Client to modify its carrier or third party administrator billing and notify insurers of a COBRA Continuant’s termination from COBRA coverage when Benefitfocus remits premiums paid by continuants to Client.
  10. Benefitfocus will not be responsible for failure of delivery of any notice mailed by Benefitfocus using the qualified beneficiary information provided to Benefitfocus by Client.
  11. Benefitfocus will not be responsible for inaccurate notification or premium payment errors, to the extent applicable to the COBRA Administration, except to the extent such inaccurate notification or errors are caused by Benefitfocus.
  12. Plans not set up within the Benefitfocus Benefitplace in accordance with Benefitfocus requirements will not be included in the COBRA Administration.
  13. Client will be solely responsible for complying with ERISA, the Internal Revenue Code, HIPAA, COBRA and any other applicable federal, state and local laws with respect to the Client Plan.
  14. Benefitfocus Custodial Account: Client appoints Benefitfocus as custodian for the purposes, and upon the terms and conditions set forth in this Appendix, and will cause Benefitfocus to accept such appointment and agree to act as custodian hereunder and to hold any Client funds received hereunder in accordance with following the terms and conditions set forth in this Appendix. At all times, the assets comprising each of Client’s funds in the Custodial Account will be considered a separate sub‑account for purposes of this Appendix. Depending upon the context, the term “Custodial Account” will refer to either the separate sub‑account for Client or all of the sub‑accounts for all employers in the aggregate. Custodial funds provided to Benefitfocus by Client for the payment or funding of any claims for benefits in connection with the Client Plan, including, without limitation, where sought as damages in an action against the Plan (“Client Funds”) will be held in a Benefitfocus‑owned Custodial Account.
    1. COBRA Custodial Account: Benefitfocus will open and maintain one or more depository accounts (the “Custodial Account”) at Healthcare Bank (the “Bank”). Benefitfocus will deposit in the COBRA Custodial Account all payments received from qualified beneficiaries, less any portion of the payment that constitutes administrative fees payable by the qualified beneficiary. Upon deposit, such payments will become “Client Funds” (minus any applicable fees or other costs as set forth in this Appendix). For administrative convenience and to reduce costs, Benefitfocus will hold Client Funds of the Client together with similar funds from other clients in the Custodial Account (or one or more Custodial Accounts). However, Benefitfocus will maintain records as to the exact amount of funds of each client so that each client has a legal right to the specific amount of funds held in the Custodial Account (minus any applicable fees or other costs as set forth in this Appendix).
      1. For the COBRA Administration, Benefitfocus will forward COBRA qualified beneficiary health insurance premiums from the Custodial Account to a single bank account opened and maintained by the Client and in accordance with this Appendix and Client’s group benefit plan. Benefitfocus will neither have, nor shall be deemed to have, any discretion, control, or authority with respect to the disposition of Client Funds.
  15. Benefitfocus and Client intend and agree that Client Funds are, and shall remain, the general assets of Client, are not the general assets of Benefitfocus, and are not plan assets within the meaning of ERISA. Except to the extent that outstanding checks have been written against the account on behalf of Client, and to the extent applicable to the COBRA Administration, Client Funds may be withdrawn by Client at any time (minus any applicable fees or other costs as set forth in this Appendix) and are subject to Client’s creditors in the same manner as funds contributed to Client’s ordinary checking accounts.
  16. Benefitfocus and Client acknowledge and understand that Benefitfocus may receive interest income from time to time on the funds held in the Custodial Account and that any such interest income received by Benefitfocus on Client Funds will be the sole property of Benefitfocus. Client acknowledges and understands that compensation otherwise charged by Benefitfocus for the COBRA Administration under the Appendix would be higher if it did not retain such interest on these funds. The period during which interest income may be earned begins on the dates Client Funds are transferred to the Custodial Account and ends when this Appendix terminates. Funds will be disbursed on a first‑in‑first‑out basis.
  17. Fiduciary Status: In addition to the rights and obligation of the Parties, the following provisions will also be incorporated into this Appendix:
    1. Plan Fiduciary: Benefitfocus and Client agree that Benefitfocus is not the plan administrator, a Named Fiduciary, and is not a plan fiduciary under the Plan(s), as such terms are described under ERISA. Benefitfocus will have no power or authority to waive, alter, breach or modify any terms and conditions of the Plan. Benefitfocus will make payments or distributions from the Custodial Account in accordance with the framework of policies, interpretations, rules, practices and procedures set forth in the Plan, this Appendix and as otherwise agreed upon or directed by Client. Benefitfocus will neither have, nor shall be deemed to, exercise any discretion, control, or authority with respect to the disposition of Client funds. Client agrees that use of or offset of amounts in the Custodial Account to pay for fees or other amounts due to Benefitfocus under this Appendix, or any other agreement between the Parties, will constitute a Client action that is authorized by Client under this Appendix. Client agrees that such actions are not discretionary acts of Benefitfocus and do not create fiduciary status for Benefitfocus. Benefitfocus agrees that it will perform COBRA Administration on the Plan’s behalf, as set forth in this Appendix and any attachments or other exhibits. However, Benefitfocus will not undertake any duties or responsibilities, regardless of whether they are set forth in the plan, if such actions are in violation of any applicable laws or regulations.
  18. Client Plan Data: Upon termination of this Appendix, Benefitfocus will maintain Client’s records in an electronic format as required by law. Following such termination, Benefitfocus will cooperate with Client (or Client’s subsequent service provider) to affect an orderly transfer of Client Data covered by the Appendix in a generally commercially available media and format.
  19. Notwithstanding anything to the contrary within this Appendix, the Agreement or the applicable Order Form, Benefitfocus reserves the right to increase fees to Client at any time that are caused by Federal postal rate increases, are due to Federal legislative changes, or are due to the provision of additional services to Client by Benefitfocus that were not included in or contemplated by this Appendix on the Effective Date. Benefitfocus will provide Client with thirty (30) days written notice of fee changes resulting from Federal postal rate increases or Federal legislative changes.
  20. Client agrees to assist Benefitfocus as needed with any communication or issue resolution with any required third parties and Authorized Users.
  21. Neither Party shall be liable for any delay caused by the other Party, or their respective contractors, agents, employees, or vendors.
  22. Benefitfocus shall not make or be liable for any determinations regarding eligibility, and Client shall be responsible for making all determinations regarding Authorized User eligibility for Client’s Plan(s).