COBRA Processing Part 2: Use R/3 to Manage Enrollment and Billing

  • by Clay Molinari, SAP HR Consultant, C&C Savant, Inc.
  • June 15, 2004
In the second of his two-part series on the Consolidated Omnibus Budget Reconciliation Act (COBRA), the author discusses how to administer a COBRA plan. Specifically, he covers the enrollment and billing processes by recounting a participant's journey through the COBRA life cycle.
Key Concept

The following is the second of a two-part series on configuration and processing of the Consolidated Omnibus Budget Reconciliation Act (COBRA). The first part, published in the May 2004 HR Expert, covered COBRA configuration along with the procedures for collecting COBRA-qualified events and producing COBRA enrollment packages. This month’s article covers the ongoing administration of COBRA participation.

Many companies have outsourced the administration portion of the COBRA process because they think that outsourcing is less expensive than developing an entire proprietary application. However, R/3 contains COBRA enrollment and billing capability that you may find less expensive than outsourcing. If you already use SAP HR for benefits, very little work is required to activate the COBRA administration system. COBRA law allows companies to add a 2 percent administrative fee to COBRA premiums. This fee should cover the costs of managing enrollment and billing.

Typical COBRA Enrollment Life Cycle

In the first article, I explained how a COBRA-qualified event is recognized by the system, and then I demonstrated the delivery of a COBRA enrollment package to the beneficiary. At this point, the administrator uses the election period monitor transaction to track the time period during which potential beneficiaries may make their election. Extensions of coverage that are accepted are entered using the COBRA participation transaction. Invoices are created showing the premium amounts due. Payments are received and entered into the system. The continuation period is monitored and coverage is terminated once the time period has expired. The COBRA configuration parameters found via IMG menu path Personnel Management > Benefits > COBRA drive all these transactions.

Clay Molinari

Clay Molinari has 20 years of experience in the IT industry and has been working as an SAP HR consultant since 1997. He is currently president of C&C Savant, Inc., an SAP consulting firm that specializes in combining standard SAP configuration and custom ABAP programming to help its clients solve unique or complicated requirements.

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