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What is COBRA Insurance?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) created a Federal Law requiring most employers with more than 20 employees who offer group health care coverage to give their employees, spouse and their dependents the option to continue their health care coverage when a loss in coverage occurs. COBRA coverage is the same coverage the employee had when they were actively working for the employer. However, the employee is responsible for 100 percent of the premiums, plus possibly a two percent administration fee.

COBRA provides individual former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. Many people do not understand the laws surrounding COBRA eligibility and their rights under the law. We are here to help. Because your employer has outsourced their administrator to us, we will be here every step of the way and minimize the hassle of understanding your COBRA rights.

It is a Federal Program that gives an employee the ability to maintain group medical coverage if it is lost due to termination, disability, death of the covered employee or another qualifying event.

The COBRA statutes apply to businesses with 20 or more employees that offer group health coverage. It does not matter if the former employer pays for the premium, in whole or in part, for its employees, only that the insurance is available. For the purposes of COBRA, group medical coverage is defined loosely and includes everything from Preferred Provider policies, HMO coverage, self-funded plans, to any variation of an employer/employee arrangement for medical care.

Several states have additional statutes requiring businesses employing fewer than twenty people to comply with COBRA law. Determination of eligibility depends on the event that caused the loss of benefits.

What is a COBRA Election Notice & SBC?

You must be suitable for continuation coverage under COBRA or state law that provides comparable continuation coverage (for example, so-called “mini-COBRA” laws) at any time during the period beginning September 1, 2008, and ending December 31, 2009. 

Continuation coverage must be extended when first offered or during the additional election period. A qualifying event for the continuation coverage is the employee’s involuntary termination during the period beginning September 1, 2008, and ending December 31, 2009.

What does a COBRA election notice include?

Notice of COBRA rights generally includes the following information:

  • A written explanation of the procedures for electing COBRA
  • The date by which the election must be made
  • How to notify the plan administrator of the election
  • The date COBRA coverage will begin,
    The maximum period of continuation coverage
  • The monthly premium amount,
    The due date for the monthly payments
  • Any applicable premium amount due for a retroactive period of coverage
  • The address to which to send premium payments
  • A qualified beneficiary’s rights and obligations with respect to extensions of COBRA coverage, and The basis for early termination of the period of COBRA coverage.

Plans also must provide a Summary of Benefits and Coverage (SBC) that accurately describes the benefits and coverage under the applicable plan. The SBC is a uniform template that uses clear, plain language to summarize key features of the plan, such as covered benefits, cost-sharing provisions and coverage limitations. Plans and issuers must provide the SBC to participants and beneficiaries at certain times (including with written application materials, at renewal, upon special enrollment, and upon request).

Does COBRA count as qualifying health coverage (or “minimum essential coverage”)?

The applicant (person requesting a review of a denial of premium assistance) may either be the former employee or a member of the employee’s family who is eligible for COBRA continuation coverage or the COBRA premium assistance through an employment-based health plan. Employee and his or her family members may each elect to continue health coverage under COBRA, request the premium assistance, and require a review of a denial of premium assistance.

  • Yes. This means if you have COBRA coverage, you don’t have to pay the fee that people without coverage must pay.

What are Qualifying events that cause an individual to lose his or her group health coverage?

The type of qualifying event determines who the qualified beneficiaries are for that event and the
period of time that a plan must offer continuation coverage. COBRA establishes only the minimum
requirements for continuation coverage. A plan may always choose to provide longer periods of continuation
coverage.

The following are qualifying events for the spouse and dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:

  • Termination of the covered employee’s employment for any reason other than gross misconduct;
    Reduction in the hours worked by the covered employee;
  • Covered employee becomes entitled to Medicare;
  • Divorce or legal separation of the spouse from the covered employee;
  • Death of the covered employee.
  • In addition to the above, the following is a qualifying event for a dependent child of a covered employee if it causes the child to lose coverage:
  • Loss of dependent child status under the plan rules. Under the Patient Protection and Affordable Care Act plans that offer coverage to children on their parents’ plan must make the coverage available until the adult child reaches the age of 26.

Under COBRA, what benefits must be covered?

The continuation coverage must be identical to the coverage currently available under the plan to similarly situated individuals who are not receiving continuation coverage. (Generally, this is the same coverage that the qualified beneficiary had immediately before the qualifying event.) A qualified beneficiary receiving continuation coverage must receive the same benefits, choices, and services that a similarly situated participant or beneficiary currently receives under the plan, such as the right during an open enrollment season to choose among available coverage options. The qualified beneficiary is also subject to the same plan rules and limits that would apply to a similarly situated participant or beneficiary, such as co-payment requirements, deductibles, and coverage limits. The plan’s rules for filing benefit claims and appealing any claims denials also apply.

Any changes to the plan’s terms that apply to similarly situated active employees and their families will also apply to qualified beneficiaries receiving COBRA continuation coverage. If a child is born to or adopted by a covered employee during a period of continuation coverage, the child is automatically considered to be a qualified beneficiary receiving continuation coverage. The plan must allow the child to be added to the continuation coverage.

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