The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides employees and their family members who lose health coverage the option to continue coverage offered by their employer’s group health plan for limited periods. Certain circumstances must be present, such as a transition between jobs, involuntary or voluntary job termination, divorce, reduction in the hours worked, death, and other life events. However, individuals who qualify may be obligated to pay the full premium for coverage of the plan.
1. Question: What Is COBRA Continuation Health Coverage?
COBRA health benefits provisions are an amendment to the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and the Public Health Service Act that requires group health plans to provide a temporary extension of group health coverage that otherwise might be canceled.
2. Question: What Group Health Plans Are Subject to COBRA?
The law pertains to all group health plans managed by state or local governments and private-sector businesses with 20 or more employees. The law does not apply to programs sponsored by churches, certain church-related organizations, or the federal government. Also, many states have regulations comparable to COBRA, including those that apply to mini-COBRA health insurers of employers with less than 20 employees. Make sure to contact your state insurance commissioner’s office to determine if this type of coverage is possible for your business.
3. Question: How Long Do I Have to Elect COBRA Coverage?
If you are eligible to choose COBRA coverage, you must be given at least 60 days for an election period. The latter date is when the election notice was provided to the employee, or the date coverage will be lost, to choose whether or not to elect COBRA continuation coverage.
Also, each recipient may separately elect COBRA coverage for a qualifying event. For example, if both spouses are eligible to choose continuation coverage, they can each decide independently of the other whether or not to do so. However, although the covered employee or spouse may elect on behalf of any dependent children or all qualified beneficiaries, a legal guardian or parent may accept or deny coverage for a minor child.
4. Question: Who Is Entitled to Continuation Coverage Under COBRA?
To be qualified to elect COBRA continuation coverage, the original group health plan must be a COBRA-covered program, a qualifying circumstance must transpire, and the employee or family member must be an eligible beneficiary for that event. Also, the employee must have been enrolled in the employer’s group health plan during their employment, and the plan must be in current effect for active employees.
- Plan Coverage: COBRA is comprised of group health plans that are sponsored by employers with at least 20 employees. Both full and part-time employees are included to determine if a plan is eligible for COBRA.
- Qualifying Events: Situations that cause an individual to lose group health coverage are qualifying events. COBRA establishes the minimum conditions for continuation coverage, but a plan may elect to provide longer periods of coverage.
- Qualified Beneficiaries: A person covered by a group health plan the day before a qualifying event occurs that is the cause of a loss of coverage is a qualified beneficiary. A qualified beneficiary is a covered employee, spouse or former spouse, or dependent child or children. Also, the birth of a child or one that is placed in the home for foster care or adoption with an employee who is covered during a period of COBRA continuation coverage is automatically deemed a qualified beneficiary.
5. Question: Is a Former Spouse Eligible for COBRA Coverage From Their Divorced Spouses’ Group Health Plan?
Yes. An employee’s spouse would lose health coverage in the event of a divorce and may elect continuation coverage under the plan for 36-months. The plan administrator provides notification to the qualified beneficiary of the election for COBRA continuation coverage.
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