Frequently Asked Questions Regarding COBRA
QUESTION: What Is COBRA?
COBRA stands for Consolidated Omnibus Budget
Reconciliation Act (COBRA, 1985). There were many reasons why this bill was
passed, including cost shifting from the federal government to the private
sector, but this answer will concentrate on the primary reason.
In the past when an employee terminated employment
their medical insurance coverage terminated also. In addition, when a dependent
child reached adult age or graduated from college their coverage would end.
There were also the issues of an employee dying, their group coverage ending
and leaving their families without medical coverage.
The COBRA act provided, in most cases, for the
extension of medical coverage for a period of time. It was designed to ease the
burden of sudden lose of medical coverage and allowed for its' extension during
a transition period while other coverage could be obtained.
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QUESTION: Why and when might
I or my dependents need COBRA?
The question "What
is COBRA" explains to some extent why you might need COBRA. But
basically some of the reasons you, or your dependents, might need COBRA are:
-
You terminate employment for some reason, except for gross misconduct, and lose
your benefits.
-
Your hours are reduced placing you in a benefits ineligible group and you lose
your benefits.
-
One of your children reach adult age, usually 19, and is not a full time
student. They might be losing coverage.
-
One of your children is a full time student and is covered, but reaches
majority age for the plan and loses coverage. This age is determined by the
plan you are covered by but is usually age 23.
-
You die, possibly leaving your family without coverage.
-
You become eligible for Medicare. In this case only your spouse and dependents
would be qualified for COBRA.
-
You get a divorce or legal separation from your spouse leaving them without
coverage. In this case they could be qualified for COBRA coverage.
The reasons you might need COBRA listed above are
called "qualifying events". It is important to note that only those
covered (employee, spouse, dependents) can have COBRA at the time of a
qualifying event. Under certain conditions dependents may be able to be added
at the next open enrollment period but cannot be added just because a COBRA
qualifying event occurred if coverage was not already in place.
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QUESTION: What
makes me, or my dependents, eligible for COBRA?
First, you must already be covered by an eligible
benefit such as medical, dental, etc. Second, you (or one or more of your
dependents) must experience one of the "qualifying events"
listed in the question above, "Why
and when might I or my dependents need COBRA?".
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QUESTION: How long can I
or my dependents keep COBRA?
Coverage periods are broken down into two periods
or lengths of time - 18 or 36 months. The type of "qualifying event"
determines the length of time that COBRA coverage may remain in force. The
table below will give you a general guideline.
18 Month Qualifying Events
-
Voluntary Termination
-
Involuntary Termination (Gross Misconduct Exception)
-
Reduction of Hours (Strike, layoff, leave of absence, full-time to part-time,
etc.)
36 Month Qualifying Events
-
Death of the Employee
-
Employee's Medicare Entitlement
-
Divorce or Legal Separation
-
Dependent Child Ceasing to be a Dependent
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QUESTION: How much
time do I have to report to my employer I might need COBRA?
Your employer is responsible for knowing about
some qualifying events and you, or your qualified beneficiary, is required to
notify the employer of some events.
The employer is responsible for knowing when any of the following events occur.
-
Voluntary Termination
-
Involuntary Termination
-
Reduction of Hours
-
Death of the Employee
-
Medicare Entitlement
-
Employer's Bankruptcy
The employee or other qualified beneficiary must inform the employer or plan
administrator when one of the following qualifying events occurs:
-
Divorce or Legal Separation
-
Dependent Child Ceasing to be a Dependent
The employee or qualified beneficiary must inform the employer or plan
administrator of the occurrence of one of these events within 60 days from the
later of:
-
The date of the event
-
The date on which the qualified beneficiary would lose coverage on account of
the event
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QUESTION: How much time
does my employer have to provide me with information?
An employer becomes aware of a qualifying event in
two ways. First, the employer is responsible for knowing about certain
qualifying events without being notified by the employee or qualified
beneficiary. Second, there are other qualifying events the employer will only
know about when they are notified by the employee or qualified beneficiary.
Those events are listed in the question, How much time do I have to report to my
employer I might need COBRA?
Once the employer is made aware of a qualifying event
they have a certain period of time to provide information to the qualified
beneficiaries. The main time frames are as follows:
-
If the employer does their own COBRA administration they have 44 days to notify
qualified beneficiaries of their rights.
-
If the employer uses an outside COBRA administrator, they have 30 days to
notify the administrator of the qualifying event, who then has 14 days to
notify qualified beneficiaries of their rights.
After the COBRA notification is
sent, you, and/or your qualified beneficiaries, then have 60 days to
complete and return it. After you complete and return the notice you have an
additional 45 days to pay the premium due, including the back premiums due from
the date of the qualifying event or the date benefits ended. If either of these
targets are missed the right to continue COBRA benefits is forfeited. Please
note that even though you have the 60 day and 45 day targets coverage does not
have to be provided to you until all due premiums are received by the plan
administrator.
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QUESTION: Are there other
time frames I need to be aware of?
Yes. The COBRA laws, rules, regulations,
and court rulings are many and complex. When any event occurs that you believe
is covered under COBRA you should contact your Human Resource or Benefits
department and get specific information regarding your plan.
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