What is COBRA?
What is COBRA?
Overview
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances. Federal COBRA requires that group health plans, sponsored by employers with 20 or more employees in the prior year, provide notice and offer employees and their families the opportunity for a temporary extension of health coverage where coverage under the plan would otherwise have been terminated. COBRA outlines how employees and family members may elect continuation coverage and qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
Overview
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances. Federal COBRA requires that group health plans, sponsored by employers with 20 or more employees in the prior year, provide notice and offer employees and their families the opportunity for a temporary extension of health coverage where coverage under the plan would otherwise have been terminated. COBRA outlines how employees and family members may elect continuation coverage and qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
Qualified Beneficiaries
A qualified beneficiary is an individual covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage.
- 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 former spouse, or the employee's dependent child.
- A retired employee, the retired employee's spouse, and the retired employee's dependent children may be qualified beneficiaries.
- Any child born to or placed for adoption with a current COBRA participant 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.
A qualified beneficiary is entitled to the same rights under the group benefit plans as a “similarly situated active employee”. Each person enrolled on the qualifying plans the day before the qualifying event has separate election rights. Therefore, if an entire family experiences a qualifying event, each family member can choose to elect or waive COBRA independently. A qualified beneficiary has 60 days to elect coverage based on the later of their loss of coverage date or notification date. If a qualified beneficiary waives their right to COBRA coverage, they can revoke their waiver within their 60 day election period.
Qualified Beneficiaries
A qualified beneficiary is an individual covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage.
- 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 former spouse, or the employee's dependent child.
- A retired employee, the retired employee's spouse, and the retired employee's dependent children may be qualified beneficiaries.
- Any child born to or placed for adoption with a current COBRA participant 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.
A qualified beneficiary is entitled to the same rights under the group benefit plans as a “similarly situated active employee”. Each person enrolled on the qualifying plans the day before the qualifying event has separate election rights. Therefore, if an entire family experiences a qualifying event, each family member can choose to elect or waive COBRA independently. A qualified beneficiary has 60 days to elect coverage based on the later of their loss of coverage date or notification date. If a qualified beneficiary waives their right to COBRA coverage, they can revoke their waiver within their 60 day election period.
Qualifying Events
When a qualifying event occurs, an employee and/or dependents lose their coverage under the group’s benefit plan. 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.
18 Month Qualifying Events:
- Voluntary Termination
- Involuntary Termination (Gross Misconduct Exception)
- Reduction of hours, including events such as a strike, temporary layoff, transition from full time to part time, or non-FMLA leave of absence
36 Month Qualifying Events:
- Death of the Employee (applies to spouse and covered dependents)
- Medicare Entitlement (applies to spouse and covered dependents)
- Divorce or Legal Separation (applies to spouse and covered dependents)
- When a dependent child ceases to be a dependent as a result of being overage, a student or married
- Employer’s Bankruptcy
An employee is responsible for notifying the employer of any divorce or legal separation, as well as loss of dependent status.
Secondary Qualifying Event
If you are receiving an 18-month maximum period of continuation coverage, you may become entitled to an 18-month extension (giving a total maximum period of 36 months of continuation coverage) if you experience a second qualifying event that is the death of a covered employee, the divorce or legal separation of a covered employee and spouse, a covered employee's becoming entitled to Medicare (in certain circumstances), or a loss of dependent child status under the plan. The second event can be a second qualifying event only if it would have caused you to lose coverage under the plan in the absence of the first qualifying event. If a second qualifying event occurs, you will need to notify the plan.
Qualifying Events
When a qualifying event occurs, an employee and/or dependents lose their coverage under the group’s benefit plan. 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.
18 Month Qualifying Events:
- Voluntary Termination
- Involuntary Termination (Gross Misconduct Exception)
- Reduction of hours, including events such as a strike, temporary layoff, transition from full time to part time, or non-FMLA leave of absence
36 Month Qualifying Events:
- Death of the Employee (applies to spouse and covered dependents)
- Medicare Entitlement (applies to spouse and covered dependents)
- Divorce or Legal Separation (applies to spouse and covered dependents)
- When a dependent child ceases to be a dependent as a result of being overage, a student or married
- Employer’s Bankruptcy
An employee is responsible for notifying the employer of any divorce or legal separation, as well as loss of dependent status.
Secondary Qualifying Event
If you are receiving an 18-month maximum period of continuation coverage, you may become entitled to an 18-month extension (giving a total maximum period of 36 months of continuation coverage) if you experience a second qualifying event that is the death of a covered employee, the divorce or legal separation of a covered employee and spouse, a covered employee's becoming entitled to Medicare (in certain circumstances), or a loss of dependent child status under the plan. The second event can be a second qualifying event only if it would have caused you to lose coverage under the plan in the absence of the first qualifying event. If a second qualifying event occurs, you will need to notify the plan.
Disability
If any one of the qualified beneficiaries in your family is disabled and meets certain requirements, all of the qualified beneficiaries receiving continuation coverage due to a single qualifying event are entitled to an 11-month extension of the maximum period of continuation coverage (for a total maximum period of 29 months of continuation coverage). The plan can charge qualified beneficiaries an increased premium, up to 150 percent of the cost of coverage, during the 11-month disability extension. The requirements are: 1. That the Social Security Administration (SSA) determines that the disabled qualified beneficiary is disabled before the 60th day of continuation coverage; and 2. That the disability continues during the rest of the 18-month period of continuation coverage.
The disabled qualified beneficiary or another person on his or her behalf also must notify the plan of the SSA determination. The plan can set a time limit for providing this notice of disability, but the time limit cannot be shorter than 60 days, starting from the latest of: (1) the date on which SSA issues the disability determination; (2) the date on which the qualifying event occurs; (3) the date on which the qualified beneficiary loses (or would lose) coverage under the plan as a result of the qualifying event; or (4) the date on which the qualified beneficiary is informed, through the furnishing of the SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.
The right to the disability extension may be terminated if the SSA determines that the disabled qualified beneficiary is no longer disabled. The plan can require qualified beneficiaries receiving the disability extension to notify it if the SSA makes such a determination, although the plan must give the qualified beneficiaries at least 30 days after the SSA determination to do so.
Disability
If any one of the qualified beneficiaries in your family is disabled and meets certain requirements, all of the qualified beneficiaries receiving continuation coverage due to a single qualifying event are entitled to an 11-month extension of the maximum period of continuation coverage (for a total maximum period of 29 months of continuation coverage). The plan can charge qualified beneficiaries an increased premium, up to 150 percent of the cost of coverage, during the 11-month disability extension. The requirements are: 1. That the Social Security Administration (SSA) determines that the disabled qualified beneficiary is disabled before the 60th day of continuation coverage; and 2. That the disability continues during the rest of the 18-month period of continuation coverage.
The disabled qualified beneficiary or another person on his or her behalf also must notify the plan of the SSA determination. The plan can set a time limit for providing this notice of disability, but the time limit cannot be shorter than 60 days, starting from the latest of: (1) the date on which SSA issues the disability determination; (2) the date on which the qualifying event occurs; (3) the date on which the qualified beneficiary loses (or would lose) coverage under the plan as a result of the qualifying event; or (4) the date on which the qualified beneficiary is informed, through the furnishing of the SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.
The right to the disability extension may be terminated if the SSA determines that the disabled qualified beneficiary is no longer disabled. The plan can require qualified beneficiaries receiving the disability extension to notify it if the SSA makes such a determination, although the plan must give the qualified beneficiaries at least 30 days after the SSA determination to do so.