Guide to Processing COBRA Qualifying Events

SAP identifies employees and/or their dependents who have experienced COBRA qualifying events by checking the employees’ HR master data records. For each type of COBRA qualifying event, the system looks for specific HR master records for information that indicates that type of event has occurred.

Let’s take a look at how to process some of these COBRA qualifying event types and identify the master data being checked by the system.

COBRA Qualifying Event: Divorce

When an employee experiences a divorce, the following HR master data records are required for SAP to recognize that a divorce has occurred and needs to be collected for COBRA processing.

1. Create a new Family Member/Dependents (Infotype 0021) record with the Subtype 10 -Divorced spouse as of the date of the divorce. This is the record the system will be checking as the indication that a COBRA qualifying event type has taken place and that this is the qualifying beneficiary that needs to be processed for COBRA.

2. Update the Marital Status field on Personal Data (Infotype 0002) record (This step is not required by the system for COBRA processing, but if you’re maintaining this information for your employees, you should update this field for data consistency.)

3. Run the COBRA Event Collection transaction (HRBENUSCOB01) to collect the qualifying event and beneficiary.

4. Run the COBRA Letter Generation transaction (HRBENUSCOB02) to print the COBRA letter for the qualifying beneficiary which, in this case, is the divorced spouse.

5. After processing step 4, SAP automatically delimits all the health plans in which coverage included the spouse and creates new health plan records with employee coverage only as of the COBRA eligibility date.

Keep in mind that only health plans (medical, dental and vision) are delimited as part of the COBRA Letter Generation process. Most organizations offer different types of insurance plans and savings plans that will need to be changed due to this life event. If that is the case, the following may be required.

6. If your organization has a Benefits adjustment reason for divorce, you need to create a new Adjustment Reasons (Infotype 0378) record with the corresponding reason as of the date of the divorce. This will allow the employee or your Benefits team make the necessary benefits election changes permitted due to the divorce life event.

7. Make the necessary benefits election changes using the adjustment reason created in step 6 through the Benefits Enrollment transaction (HRBEN0001). These changes include removing the spouse from the employee’s health plans (no longer necessary since the COBRA Letter Generation transaction will automatically remove the spouse when executed), terminating/waiving spousal life, or removing the spouse as the beneficiary from the employee’s insurance plans.

8. Delimit the employee’s spouse record from Family Member/Dependents (Infotype 0021). The end date of the spouse record should be one day prior to the divorce date or the last day of their coverage on a regular plan, depending on what your coverage termination policies are.

NOTE: If the spouse is not covered under the employee’s health coverage prior to the divorce, standard SAP will not recognize the divorce as a COBRA qualifying event. If the employee chose to waive health coverage prior to the divorce, standard SAP will not recognize the divorce as a COBRA qualifying event.

COBRA Qualifying Event: Child’s Loss of Dependent Status (Over-age)

When an employee’s dependent child/stepchild turn age 26, he/she loses dependent status and becomes COBRA eligible. The following HR master data record is required for SAP to recognize that a loss of dependent status has occurred and needs to be collected for COBRA processing.

1. A Family Member/Dependents (Infotype 0021) record with the Subtype 2 -Child (or Subtype 6-Stepchild) must be maintained for the dependent child in the system with the correct date of birth in the Birth Date field. The system uses the Birth Date field to determine the dependent child’s age. If the age is 26, this is the indication that a COBRA qualifying event type has taken place and that this is the qualifying beneficiary that needs to be processed for COBRA.

2. Run the COBRA Event Collection transaction (HRBENUSCOB01) to collect the qualifying event and beneficiary.

3. Run the COBRA Letter Generation transaction (HRBENUSCOB02) to print the COBRA letter for the qualifying beneficiary which, in this case, is the over-age dependent child.

4. After processing step 3, SAP automatically delimits all the health plans in which coverage included the child/stepchild and creates new health plan records with employee coverage only (or employee + spouse if spouse was covered at the time of the COBRA event) as of the COBRA eligibility date.

Keep in mind that only health plans (medical, dental and vision) are delimited as part of the COBRA Letter Generation process.

NOTE: If the child/stepchild is not covered under the employee’s health coverage prior to turning age 26, standard SAP will not recognize the loss of dependent status as a COBRA qualifying event. If the employee chose to waive health coverage prior to the child/stepchild turning age 26, standard SAP will not recognize the loss of dependent status as a COBRA qualifying event.

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