Employers are some of our favorite people.

Clearly, you’ve probably heard of COBRA—officially known as the Consolidated Omnibus Budget Reconciliation Act. But what exactly does it mean for you and your business?

In a nutshell, COBRA is a federal law that allows employees to continue their health insurance coverage after they leave your company, whether it’s because of a job loss, a reduction in work hours, or other qualifying events like divorce or a dependent aging out of your health plan. Pretty helpful, right?

Now, here’s the kicker: as an employer, you’ve got some responsibilities to make sure you’re in compliance with COBRA. These include:

1. What Employers Have to Offer COBRA: COBRA applies to employers with 20 or more employees, so if you’re in that group, you’re on the hook. You need to offer continued health coverage to those who qualify, whether they’re full-time, part-time, or dependents.
2. Notification is Key: You’re required to notify employees about their COBRA rights when they’re hired, and again when they experience a qualifying event (like termination or reduction in hours). If you don’t send out the proper notices, you could face fines or penalties.
3. Duration of Coverage: Eligible employees can generally stay on COBRA for up to 18 months, though certain situations can extend that. The key here is that they can’t stay on your plan forever, so you must inform them when the coverage period is nearing its end.
4. Premium Payments: Employees who opt for COBRA coverage have to pay the full premium themselves (including the portion that the employer usually pays). However, you’re responsible for collecting those payments on time. Make sure to have a system in place for that.
5. Plan Continuation: COBRA coverage must be the same as what you offer active employees. No changes in coverage or benefits—just like they’re still working for you but paying for the privilege.

In short, COBRA can seem like a lot of admin work, but it’s really about keeping employees covered and compliant with the law. If you’re running a business with 20 or more employees, it’s important to get familiar with the details and keep in communication with us so we can support you through it all.

To learn how COBRA applies to employees, visit our COBRA member page. We cover a lot of information about Qualifying Events, timelines and payment rules. You can also download our nifty COBRA Lifecyle Flyer. This resource will help give you a snapshot of your responsibilities and how a member cycles through the COBRA process.

For you as an employer, your main goals are to notify us when you have a qualifying event, reconcile your carrier bills, and assist us with open enrollment each year so we have accurate carrier, plan and rate details in our systems and can guide your COBRA members through their annual enrollment opportunity.

Alright, so you’ve just hired someone—exciting, right? But, hold up! There’s one more thing you need to do. It’s that little thing called the COBRA notice. You might be thinking, “Wait, why do I need to send that to someone who just started?” Great question!

Here’s the deal: even though a new hire is just getting started with your company’s health benefits, COBRA requires you to inform them about their rights under the law, just in case something unexpected happens later on. Think of it as giving them a heads-up for the future.

Here’s why it matters:

1. It’s the Law: First and foremost, you have to do it. Under COBRA, employers are required to provide a notice to new hires within a reasonable time—usually within the first 90 days of employment. It’s part of the law to make sure employees understand their health insurance options if they ever need to continue coverage after leaving your company.
2. Prepares Them for the “What If”: No one plans on leaving a job, but life happens. If an employee were to lose coverage—whether it’s due to a job change, reduced hours, or something else—they’ll need to know they can keep their health insurance. The COBRA notice is a friendly reminder that they have the option to keep that coverage if they need it.
3. Avoiding Penalties: If you don’t send this notice when required, you could end up facing penalties or fines. So, while it might seem like just another formality, it’s actually an important step in staying compliant with the law and avoiding unnecessary headaches later on.
4. Clear Communication: Sending the notice shows that you’re transparent and on top of things, which helps build trust with your employees. It lets them know that you’re not just giving them health insurance—you’re also giving them a clear understanding of what happens if their job situation changes.

In short, sending that COBRA notice to a new hire is more than just a box to check. It’s about making sure you’re compliant, prepared, and clear about their options down the road.

This service is included in your service package, so don’t forget to take advantage of it.

Once we get the heads-up about a Qualifying Event, Igoe jumps into action and sends the COBRA notice to the qualified beneficiaries. Inside, we’ve got all the info they need to elect COBRA and pay for it, plus the exact timelines they need to follow to make their decisions and take action—no guesswork here!

Then, once they’ve made their choice and sent in their payment, we handle the rest. First, we send the premium to you, the employer, every month (after we take care of our admin fees, of course). Then, we give your insurance carrier a friendly nudge to let them know the individual’s back in and needs to be reinstated. Easy peasy!

Just remember to reconcile that carrier bill! Even though we notify the carrier about reinstatements and terminations, we have no control over their responsiveness. It is really important to make sure you have someone regularly looking at those bills and checking them against our reports to ensure your carrier is billing you correctly and to quickly identify any connection issues due to changes in carrier eligibility requirements or contacts.

A cafeteria plan (under IRS Code Section 125) is like a benefits buffet! It’s a plan where employees get to pick and choose from a variety of benefits that work best for them, and the best part is they get to pay for many of those benefits with pre-tax dollars—which means more money in their pocket!

Here’s how it works:

1. The Benefits Menu: Employers offer a selection of benefits—think health insurance, dental, vision, flexible spending accounts (FSAs), dependent care assistance, life insurance, and more. Employees get to “order” exactly what they need, just like picking lunch in a cafeteria line!
2. Pre-Tax = More Money: When employees sign up for these benefits, the money comes out of their paycheck before taxes. This means they’re paying less in taxes and keeping more of their hard-earned cash. It’s like a sneaky little tax break!
3. Employer Savings, Too: Employers also win because they don’t have to pay payroll taxes on the employee contributions, so it’s a savings all around!
4. Use It or Lose It: Some benefits, like flexible spending accounts (FSAs), come with a “use-it or lose-it” rule. So, employees need to use up their funds before the year is over—no leftovers here!

In short, a cafeteria plan lets employees customize their benefits, save on taxes, and have a little more control over their choices. It’s a win-win for everyone!

Alright, let’s talk about why offering a Section 125 plan (that’s the fancy name for a cafeteria plan) and benefits like a Flexible Spending Account (FSA) is not just a great idea for employees—it’s a win for employers too!

1. Tax Savings for Everyone: First and foremost, when you offer a Section 125 plan, everyone gets a tax break! Employees pay for benefits like health insurance, FSAs, and other perks with pre-tax dollars. That means less money is taken out of their paycheck for taxes. And guess what? Employers save too because those pre-tax contributions aren’t subject to payroll taxes, like Social Security or Medicare. So it’s like a tax-saving party all around!
2. Attract & Retain Top Talent: Offering a Section 125 plan with cool benefits like an FSA shows employees that you care about their well-being. FSAs, for example, help employees save for things like medical expenses or dependent care, which is super attractive to people who want to feel like their employer is giving them tools to succeed—both at work and in life. The best part? Happy employees are stickier employees! They’ll be more likely to stick around when they know their employer is helping them save money and take care of their needs.
3. Flexibility Makes You Look Good: Employees love options. With a cafeteria plan, they can choose benefits that work for them, whether it’s health insurance, dependent care, or an FSA to help with medical costs. It’s like offering them a menu of perks that they can actually use! And when you give employees the flexibility to customize their benefits, they feel like they’re getting a better deal—and that’s something they’ll appreciate.
4. It’s Simple & Straightforward: Setting up a Section 125 plan isn’t as complicated as it sounds. It’s a great way to give employees valuable benefits while keeping things simple for your business. Once it’s set up, you get to enjoy the tax savings, and your employees get to enjoy the extra take-home pay. It’s like setting up a system where everyone wins!

In short, offering a Section 125 plan with benefits like an FSA is a smart move for employers. It saves you and your employees money, helps you attract and keep top talent, and shows that you’re looking out for their financial health. What’s not to love?

As an employer offering Section 125 plans (like cafeteria plans like FSAs) or Dependent Care Assistance (DCA) plans, there’s one important thing you can’t skip: testing your plans each year to make sure they follow the IRS nondiscrimination rules. But why is this necessary? Let’s dive in!

1. The IRS Wants Fairness: The whole point of these plans is to give employees tax breaks, but the IRS wants to make sure the benefits are spread out fairly. They don’t want employers offering super sweet deals only to their top executives or highly-paid employees, leaving the lower-paid workers in the dust. So, these nondiscrimination tests ensure the plan benefits don’t favor higher-income employees over everyone else.
2. Stay in the IRS’s Good Books: If you don’t run these tests each year, you could face some serious consequences. For example, you might lose the tax advantages of the plan, or worse, employees who are supposed to get tax breaks might not get them at all! The IRS can hit you with penalties or force you to pay taxes on the benefits, which could add up quickly.
3. It’s Not Complicated (Really!): The good news is that while the nondiscrimination rules might sound tricky, they’re actually pretty straightforward. Employers just need to make sure that benefits are being offered equally across different income levels and employee classes. Typically, there are a few key tests to run, like the Eligibility Test, the Contribution Test, and the Benefit Test. These checks are designed to make sure everyone is treated fairly when it comes to who can participate and what benefits they get.
4. A Little Work, Big Rewards: Sure, it may feel like one more thing to check off your to-do list each year, but running these tests keeps your plan in compliance and ensures you can keep offering tax advantages to your employees. Plus, it helps keep everyone happy—employees love tax savings, and your business stays in the IRS’s good graces.

In short, testing your Section 125 and DCA plans each year under the nondiscrimination rules is all about fairness, keeping tax benefits intact, and staying compliant. It’s a small step that helps you avoid big headaches down the road.

Uh-oh, your plan didn’t pass the nondiscrimination test! Here’s the lowdown on what that means and what you can do about it:

1. The Tax Breaks Might Disappear: The big bummer if your plan fails is that employees might lose the tax benefits they were getting. That means the money they’ve been contributing to the plan (like for health insurance or dependent care) might get taxed, which could lead to a bigger tax bill for them come tax time. Yikes! So, you definitely want to catch this before it turns into a tax headache for your team.
2. Highly Paid Employees Could Be Affected: Remember how the IRS wants fairness? Well, if your plan is seen as favoring higher-paid employees (or even the big bosses), the plan could lose its special tax status for those folks. So, if you’re offering an awesome deal for your executive team but not for your lower-paid employees, the IRS could require you to undo those sweet deals for the higher-ups. Nobody wants to be the one who has to tell the CEO, “Oops, your tax break just went away!”
3. Refunds & Adjustments: If your plan fails, you may have to give refunds to certain employees or adjust contributions to make sure it all evens out. For example, you might need to fix contributions for higher-income employees and redistribute the benefits in a more equitable way. It’s kind of like fixing a pizza that has too many toppings on one slice and not enough on the others—just make sure everyone gets a fair piece!
4. Plan Fixes and Corrective Actions: The good news is that failing the test isn’t a permanent disaster. You have a chance to fix it—and quickly. You might need to adjust how much certain employees are contributing or even redesign the plan to make sure it’s fair for everyone. Once the issue is corrected, your plan can get back on track, and the tax benefits can be restored.
5. Penalties & Costs: If you ignore the issue and don’t take corrective action, the IRS might slap you with some penalties. This could mean paying taxes on benefits you thought were exempt or even facing other financial consequences. So, while the test may seem like a hassle, it’s much easier to deal with it upfront than face penalties down the road!

Every year, we help you gear up for the big event: annual benefit renewal season! At the risk of being a little annoying, we send out a series of friendly reminders to keep you on track and make sure you’re fully prepared. These reminders will give you all the important due dates and provide you with handy tools to guide you through the process, step by step.

But wait, there’s more! Along with these helpful nudges, you’ll be connected to a dedicated team of specialists—the true pros when it comes to navigating the renewal season. These experts will work closely with your Client Relations team to make sure everything runs smoothly, from updating the system to getting you the collateral you need to educate your team.

Basically, we’ve got everything covered to help you sail through renewal season with ease—and maybe even enjoy it a little! So, sit back, relax, and let us help you make this renewal your best one yet.