|
|
Throughout a career, workers will face multiple life events, job changes or
even job losses. A law enacted in 1986 helps workers and their families keep
their group health coverage during times of voluntary or involuntary job
loss, reduction in the hours worked, transition between jobs and in certain
other cases.
|
The law — the Consolidated Omnibus Budget Reconciliation Act (COBRA) —
gives workers who lose their health benefits the right to choose to continue
group health benefits provided by the plan under certain circumstances.
|
COBRA generally requires that group health plans sponsored by employers with
20 or more employees in the prior year offer employees and their families
the opportunity for a temporary extension of health coverage (called
continuation coverage) in certain instances where coverage under the plan
would otherwise end.
|
The law generally covers group health plans maintained by employers with 20
or more employees in the prior year. It applies to plans in the private
sector and those sponsored by state and local governments. Provisions of
COBRA covering state and local government plans are administered by the
Department of Health and Human Services.
|
Several events that can cause workers and their family
members to lose group health coverage may result in the right to COBRA
coverage. These include:
-
Voluntary or involuntary termination
of the covered employee’s employment for reasons other than gross
misconduct
-
Reduced hours of work for the
covered employee
-
Covered employee becoming entitled
to Medicare
-
Divorce or legal separation of a
covered employee
-
Death of a covered employee
-
Loss of status as a dependent child
under plan rules
|
Under COBRA, the employee or family member may qualify to keep their group
health plan benefits for a set period of time, depending on the reason for
losing the health coverage. The following represents some basic information
on periods of continuation coverage:
|
Qualified
Beneficiary
|
Qualifying
Event
|
Period
of Coverage
|
Employee
Spouse
Dependent child
|
Termination
Reduced hours
|
18 months *
|
Spouse
Dependent child
|
Entitled to Medicare
Divorce or legal separation
Death of covered employee
|
36 months
|
Dependent child
|
Loss of dependent child status
|
36 months
|
|
*This 18-month period may be extended for all qualified beneficiaries if
certain conditions are met in cases where a qualified beneficiary is
determined to be disabled for purposes of COBRA.
|
However, COBRA also provides that your continuation coverage may be cut
short in certain cases.
|
|
|
-
An initial notice must be furnished to
covered employees and spouses, at the time coverage under the plan
commences, informing them of their rights under COBRA and describing
provisions of the law. COBRA information also is required to be
contained in the plan’s summary plan description (SPD)
-
When the plan administrator is
notified that a qualifying event has happened, it must in turn notify
each qualified beneficiary of the right to choose continuation coverage
-
COBRA allows at least 60 days from the
date the election notice is provided to inform the plan administrator
that the qualified beneficiary wants to elect continuation coverage
-
Under COBRA, the covered employee or a
family member has the responsibility to inform the plan administrator of
a divorce, legal separation, disability or a child losing dependent
status under the plan
-
Employers have a responsibility to
notify the plan administrator of the employee’s death, termination of
employment or reduction in hours, or Medicare entitlement
-
If covered individuals change their
martial status, or their spouses have changed addresses, they should
notify the plan administrator
|
|
|
-
Qualified individuals may be required to pay the
entire premium for coverage up to 102% of the cost to the plan.
Premiums may be higher for persons exercising the disability
provisions of COBRA. Failure to make timely payments may result in
loss of coverage
-
Premiums may be increased by the plan; however,
premiums generally must be set in advance of each 12-month premium
cycle
-
Individuals subject to COBRA coverage may be
responsible for paying all costs related to deductibles, and may be
subject to catastrophic and other benefit limits
|