In order to price
COBRA administration services on a per benefit eligible employee basis, there
are a number of variables that need to be collected. These variables can
fluctuate significantly among companies. They can also vary significantly from
year to year. COBRA administrators will typically load those rates to
accommodate those fluctuations.
An alternative to
pricing on a per-benefit-eligible basis is to price on a per-event basis. The
expense of each event can be calculated accurately and then a reasonable profit
margin can be added to it. Employers purchasing on a per-event basis only pay
for services they use. No load has to be applied to these rates because
fluctuations are easily accommodated.
Therefore, employers
that purchase COBRA administration on a per-event basis typically pay less than
half of what employers pay on a per-benefit-eligible basis.
The Author: Roger Jorgensen, RHU, REBC
Director of Marketing - HSA, FSA, HRA & COBRA
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