FAQs about COBRA Continuation Health Coverage

Q1:What is COBRA continuation health coverage?Congress passed the landmark Consolidated Omnibus
Budget Reconciliation Act health benefit provisions in 1986. The law
amends the Employee Retirement Income Security Act, the Internal Revenue
Code and the Public Health Service Act to provide continuation of group
health coverage that otherwise might be terminated.Q2:What does COBRA do?COBRA contains provisions giving certain former
employees, retirees, spouses former spouses, and dependent children the
right to temporary continuation of health coverage at group rates.
This coverage, however, is only available when coverage is lost due to
certain specific events. Group health coverage for COBRA
participants is usually more expensive than health coverage for active
employees, since usually the employer pays a part of the premium for
active employees while COBRA participants generally pay the entire premium
themselves. It is ordinarily less expensive, though, than individual
health coverage.Q3:Which employers are required - - to offer COBRA coverage?Employers with 20 or more employees are usually
required to offer COBRA coverage and to notify their employees of the
availability of such coverage. COBRA applies to plans maintained by
private-sector employers and sponsored by most state and local
governments.Q4:Who is entitled to benefits under COBRA?There are 3 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 on 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.The qualifying events for employees are:Voluntary or involuntary termination of
employment for reasons other than gross misconduct
Reduction in the number of hours of employment
The qualifying events for spouses are:Voluntary or involuntary termination of the
covered employee's employment for any reason other than gross
Reduction in the hours worked by the covered
Covered employee's becoming entitled to Medicare
Divorce or legal separation of the covered
Death of the covered employee
The qualifying events for dependent children are the
same as for the spouse with one addition:Loss of dependent child status under
the plan rules
Q5: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.Q6: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 qualified beneficiaries to pay premiums on a monthly
basis if they ask to do so, and the plan may allow them 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 http://www.law.du.edu/ - http://www.law.du.edu/ - 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 http://www.safehomealabama.gov/UserProfile/tabid/43/userId/33163/Default.aspx - lawyers in California - to notify the
qualified beneficiary 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.Q7: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 about ERISA generally, write to the EBSA office nearest where you live.
Consult the U.S. Government, U.S.
Department of Labor listing in your telephone directory for the office
nearest you or call EBSA's Toll-Free Employee Employer Hotline
number at: 866-444-3272 and request a list of EBSA offices, or write to:U.S. Department of LaborEmployee Benefits Security AdministrationDivision of Technical Assistance and Inquiries200 Constitution Avenue NW, Suite N-5619Washington, DC 20210The 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:Center for Medicare and Medicaid Services7500 Security BoulevardMail Stop S3-16-26Baltimore, MD 21244-1850Tel 410.786.3000Q8:Who can answer other COBRA questions?COBRA administration is shared by three federal
agencies. The U.S. Department of Labor handles questions about
notification rights under COBRA for private-sector employees. The
Department of Health and Human Services handles questions relating to
state and local government workers. The Internal Revenue Service,
Department of the Treasury, has other COBRA jurisdiction.More details about COBRA coverage are included in the booklet An Employer's Guide to Group Health Continuation Coverage Under COBRA - The Consolidated Omnibus Budget Reconciliation Act of 1986. To request a copy, call EBSA toll-free 866-444-3272. href='http://link.reuters.com/zyq35s' - http://link.reuters.com/zyq35s -