There are three elements to
qualifying for COBRA benefits. COBRA establishes specific criteria
for plans, qualified beneficiaries, and qualifying events:
Plan Coverage - Group
health plans for employers with 20 or more employees on more than 50
percent of its typical business days in the previous calendar year are
subject to COBRA. Both full and part-time employees are counted to
determine whether a plan is subject to COBRA. Each part-time
employee counts as a fraction of an employee, with the fraction equal to
the number of hours that the part-time employee worked divided by the
hours an employee must work to be considered full time.
Qualified Beneficiaries
- A qualified beneficiary generally is an individual covered by a
group health plan on the day before a qualifying event who is either an
employee, the employee's spouse, or an employee's dependent child.
In certain cases, a retired employee, the retired employee's spouse, and
the retired employee's dependent children may be qualified beneficiaries.
In addition, any child born to or placed for adoption with a covered
employee during the period of COBRA coverage is considered a qualified
beneficiary. Agents, independent contractors, and directors who
participate in the group health plan may also be qualified beneficiaries.
Qualifying Events - Qualifying
events are certain events that would cause an individual to lose health
coverage. The type of qualifying event will determine who the
qualified beneficiaries are and the amount of time that a plan must offer
the health coverage to them under COBRA. A plan, at its discretion,
may provide longer periods of continuation coverage.
Qualifying Events for
Employees:
Voluntary or
involuntary termination of employment for reasons other than gross
misconduct
Reduction in the number
of hours of employment
Qualifying Events for
Spouses:
Voluntary or
involuntary 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's
becoming entitled to Medicare
Divorce or legal
separation of the covered employee
Death of the covered
employee
Qualifying Events for
Dependent Children:
Loss of dependent child
status under the plan rules
Voluntary or
involuntary 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's
becoming entitled to Medicare
Divorce or legal
separation of the covered employee
Death of the covered
employee
How does a person become
eligible for COBRA continuation coverage?
To be eligible for COBRA coverage, you must have been
enrolled in your employer's health plan when you worked and the health
plan must continue to be in effect for active employees. COBRA
continuation coverage is available upon the occurrence of a qualifying
event that would, except for the COBRA continuation coverage, cause an
individual to lose his or her health care coverage.
What group health plans are
subject to COBRA?
The law generally covers health plans maintained by
private-sector employers with 20 or more employees, employee
organizations, or state or local governments.
What process must individuals
follow to elect COBRA continuation coverage?
Employers must notify plan administrators of a
qualifying event within 30 days after an employee's death, termination,
reduced hours of employment or entitlement to Medicare.
A qualified beneficiary must notify the plan
administrator of a qualifying event within 60 days after divorce or legal
separation or a child's ceasing to be covered as a dependent under plan
rules.
Plan participants and beneficiaries generally must be
sent an election notice not later than 14 days after the plan
administrator receives notice that a qualifying event has occurred.
The individual then has 60 days to decide whether to elect COBRA
continuation coverage. The person has 45 days after electing
coverage to pay the initial premium.
How long after a qualifying
event do I have to elect COBRA coverage?
Qualified beneficiaries must be given an election
period during which each qualified beneficiary may choose whether to elect
COBRA coverage. Each qualified beneficiary may independently elect
COBRA coverage. A covered employee or the covered employee's spouse
may elect COBRA coverage on behalf of all other qualified beneficiaries.
A parent or legal guardian may elect on behalf of a minor child.
Qualified beneficiaries must be given at least 60 days for the election.
This period is measured from the later of the coverage loss date or the
date the COBRA election notice is provided by the employer or plan
administrator. The election notice must be provided in person or by
first class mail within 14 days after the plan administrator receives
notice that a qualifying event has occurred.
How do I file a COBRA claim for
benefits?
Health plan rules must explain how to obtain benefits
and must include written procedures for processing claims. Claims
procedures must be described in the Summary Plan Description.
You should submit a claim for benefits in accordance
with the plan's rules for filing claims. If the claim is denied, you
must be given notice of the denial in writing generally within 90 days
after the claim is filed. The notice should state the reasons for
the denial, any additional information needed to support the claim, and
procedures for appealing the denial.
You will have at least 60 days to appeal a denial and
you must receive a decision on the appeal generally within 60 days after
that.
Contact the plan administrator for more information on
filing a claim for benefits. Complete plan rules are available from
employers or benefits offices. There can be charges up to 25 cents a
page for copies of plan rules.
Can
individuals qualify for longer periods of COBRA continuation coverage?
Yes, disability can extend the 18
month period of continuation coverage for a qualifying event that is a
termination of employment or reduction of hours. To qualify for
additional months of COBRA continuation coverage, the qualified
beneficiary must:
Have a ruling from
the Social Security Administration that he or she became disabled
within the first 60 days of COBRA continuation coverage
Send the plan a copy
of the Social Security ruling letter within 60 days of receipt, but
prior to expiration of the 18-month period of coverage
If these requirements are met,
the entire family qualifies for an additional 11 months of COBRA
continuation coverage. Plans can charge 150% of the premium
cost for the extended period of coverage.
Is a divorced spouse entitled to
COBRA coverage from their former spouses’ group health plan?
Under COBRA, participants, covered spouses and
dependent children may continue their plan coverage for a limited time
when they would otherwise lose coverage due to a particular event, such as
divorce (or legal separation). A covered employee’s spouse who
would lose coverage due to a divorce may elect continuation coverage under
the plan for a maximum of 36 months. A qualified beneficiary must
notify the plan administrator of a qualifying event within 60 days after
divorce or legal separation. After being notified of a divorce, the
plan administrator must give notice, generally within 14 days, to the
qualified beneficiary of the right to elect COBRA continuation coverage.
Divorced spouses may call their plan administrator or
the EBSA Toll-Free Employee & Employer Hotline number, 1.866.444.EBSA
(3272) if they have questions about COBRA continuation coverage or their
rights under ERISA.
If I waive COBRA coverage during
the election period, can I still get coverage at a later date?
If a qualified beneficiary waives COBRA coverage during
the election period, he or she may revoke the waiver of coverage before
the end of the election period. A beneficiary may then elect COBRA
coverage. Then, the plan need only provide continuation coverage
beginning on the date the waiver is revoked.
Under COBRA, what benefits must
be covered?
Qualified beneficiaries must be offered coverage
identical to that available to similarly situated beneficiaries who are
not receiving COBRA coverage under the plan (generally, the same coverage
that the qualified beneficiary had immediately before qualifying for
continuation coverage). A change in the benefits under the plan for
the active employees will also apply to qualified beneficiaries.
Qualified beneficiaries must be allowed to make the same choices given to
non-COBRA beneficiaries under the plan, such as during periods of open
enrollment by the plan.
When does COBRA coverage begin?
COBRA coverage begins on the date that health care
coverage would otherwise have been lost by reason of a qualifying event.
How long does COBRA coverage
last?
COBRA establishes required periods of coverage for
continuation health benefits. A plan, however, may provide longer
periods of coverage beyond those required by COBRA. COBRA
beneficiaries generally are eligible for group coverage during a maximum
of 18 months for qualifying events due to employment termination or
reduction of hours of work. Certain qualifying events, or a second
qualifying event during the initial period of coverage, may permit a
beneficiary to receive a maximum of 36 months of coverage.
Coverage begins on the date that coverage would
otherwise have been lost by reason of a qualifying event and will end at
the end of the maximum period. It may end earlier if:
Premiums are not paid on a timely
basis
The employer ceases to maintain any
group health plan
After the COBRA election, coverage
is obtained with another employer group health plan that does not
contain any exclusion or limitation with respect to any pre-existing
condition of such beneficiary. However, if other group health
coverage is obtained prior to the COBRA election, COBRA coverage may
not be discontinued, even if the other coverage continues after the
COBRA election.
After the COBRA election, a
beneficiary becomes entitled to Medicare benefits. However, if
Medicare is obtained prior to COBRA election, COBRA coverage may not
be discontinued, even if the other coverage continues after the COBRA
election.
Although COBRA specifies certain periods of time that
continued health coverage must be offered to qualified beneficiaries,
COBRA does not prohibit plans from offering continuation health coverage
that goes beyond the COBRA periods.
Some plans allow participants and beneficiaries to
convert group health coverage to an individual policy. If this
option is generally available from the plan, a qualified beneficiary who
pays for COBRA coverage must be given the option of converting to an
individual policy at the end of the COBRA continuation coverage period.
The option must be given to enroll in a conversion health plan within 180
days before COBRA coverage ends. The premium for a conversion policy
may be more expensive than the premium of a group plan, and the conversion
policy may provide a lower level of coverage. The conversion option,
however, is not available if the beneficiary ends COBRA coverage before
reaching the end of the maximum period of COBRA coverage.
Who pays for COBRA coverage?
Beneficiaries may be required to pay for COBRA
coverage. The premium cannot exceed 102 percent of the cost to the
plan for similarly situated individuals who have not incurred a qualifying
event, including both the portion paid by employees and any portion paid
by the employer before the qualifying event, plus 2 percent for
administrative costs.
For qualified beneficiaries receiving the 11 month
disability extension of coverage, the premium for those additional months
may be increased to 150 percent of the plan's total cost of coverage.
COBRA premiums may be increased if the costs to the
plan increase but generally must be fixed in advance of each 12-month
premium cycle. The plan must allow you to pay premiums on a monthly
basis if you ask to do so, and the plan may allow you to make payments at
other intervals (weekly or quarterly).
The initial premium payment must be made within 45 days
after the date of the COBRA election by the qualified beneficiary.
Payment generally must cover the period of coverage from the date of COBRA
election retroactive to the date of the loss of coverage due to the
qualifying event. Premiums for successive periods of coverage are
due on the date stated in the plan with a minimum 30-day grace period for
payments. Payment is considered to be made on the date it is sent to
the plan.
If premiums are not paid by the first day of the period
of coverage, the plan has the option to cancel coverage until payment is
received and then reinstate coverage retroactively to the beginning of the
period of coverage.
If the amount of the payment made to the plan is made
in error but is not significantly less than the amount due, the plan is
required to notify you of the deficiency and grant a reasonable period
(for this purpose, 30 days is considered reasonable) to pay the
difference. The plan is not obligated to send monthly premium
notices.
COBRA beneficiaries remain subject to the rules of the
plan and therefore must satisfy all costs related to co-payments and
deductibles, and are subject to catastrophic and other benefit limits.
If I elect COBRA, how much do I
pay?
When you were an active employee, your employer may
have paid all or part of your group health premiums. Under COBRA, as
a former employee no longer receiving benefits, you will usually pay the
entire premium amount, that is, the portion of the premium that you paid
as an active employee and the amount of the contribution made by your
employer. In addition, there may be a 2 percent administrative fee.
While COBRA rates may seem high, you will be paying
group premium rates, which are usually lower than individual rates.
Since it is likely that there will be a lapse of a
month or more between the date of layoff and the time you make the COBRA
election decision, you may have to pay health premiums retroactively-from
the time of separation from the company. The first premium, for
instance, will cover the entire time since your last day of employment
with your former employer.
You should also be aware that it is your responsibility
to pay for COBRA coverage even if you do not receive a monthly statement.
Although they are not required to do so, some employers
may subsidize COBRA coverage.
Can I receive COBRA benefits
while on FMLA leave?
The Family and Medical Leave Act, effective August 5,
1993, requires an employer to maintain coverage under any group health
plan for an employee on FMLA leave under the same conditions coverage
would have been provided if the employee had continued working.
Coverage provided under the FMLA is not COBRA coverage, and FMLA leave is
not a qualifying event under COBRA. A COBRA qualifying event may
occur, however, when an employer's obligation to maintain health benefits
under FMLA ceases, such as when an employee notifies an employer of his or
her intent not to return to work.
Further information on FMLA is available from the
nearest office of the Wage and Hour Division, listed in most telephone
directories under U.S. Government, U.S. Department of Labor, Employment
Standards Administration.
What is the Federal Government's
role in COBRA?
COBRA continuation coverage laws are administered by
several agencies. The Departments of Labor and Treasury have
jurisdiction over private-sector health group health plans. The
Department of Health and Human Services administers the continuation
coverage law as it affects public-sector health plans.
The Labor Department's interpretive and regulatory
responsibility is limited to the disclosure and notification requirements
of COBRA. If you need further information on your disclosure or
notification rights under a private-sector plan, or about ERISA generally,
telephone EBSA's Toll-Free Employee & Employer Hotline at:
1.866.444.3272, or write to:
U.S. Department of Labor
Employee Benefits Security Administration
Division of Technical Assistance and Inquiries
200 Constitution Avenue NW, Suite N-5619
Washington, DC 20210
The Internal Revenue Service, Department of the
Treasury, has issued regulations on COBRA provisions relating to
eligibility, coverage and premiums in 26 CFR Part 54, Continuation
Coverage Requirements Applicable to Group Health Plans. Both the
Departments of Labor and Treasury share jurisdiction for enforcement of
these provisions.
The Center for Medicare and Medicaid Services offers
information about COBRA provisions for public-sector employees. You
can write them at this address:
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Mail Stop S3-16-16
Baltimore, MD 21244-1850
Tel 410.786.3000
I am a federal employee.
Can I receive benefits under COBRA?
Federal employees are covered by a law similar to
COBRA. Those employees should contact the personnel office serving
their agency for more information on temporary extensions of health
benefits.
Am I eligible for COBRA if my
company closed or went bankrupt and there is no health plan?
If there is no longer a health plan, there is no COBRA
coverage available. If, however, there is another plan offered by
the company, you may be covered under that plan. Union members who
are covered by a collective bargaining agreement that provides for a
medical plan also may be entitled to continued coverage.
How do I
find out about COBRA coverage and how do I elect to take it?
Employers or health plan
administrators must provide an initial general notice if you are entitled
to COBRA benefits. You probably received the initial notice about
COBRA coverage when you were hired.
When you are no longer
eligible for health coverage, your employer has to provide you with a
specific notice regarding your rights to COBRA continuation benefits.
Employers must notify their
plan administrators within 30 days after an employee's termination or
after a reduction in hours that causes and employee to lose health
benefits.
The plan administrator must
provide notice to individual employees of their right to elect COBRA
coverage within 14 days after the administrator has received notice from
the employer.
You must respond to this
notice and elect COBRA coverage by the 60th day after the written notice
is sent or the day health care coverage ceased, whichever is later.
Otherwise, you will lose all rights to COBRA benefits.
Spouses and dependent
children covered under your health plan have an independent right to elect
COBRA coverage upon your termination or reduction in hours. If, for
instance, you have a family member with an illness at the time you are
laid off, that person alone can elect coverage.
