In a time when medical bills are the number cause for bankruptcy, continued health insurance coverage is crucial. This blog discusses general principles about which individuals can continue health insurance coverage if an employee loses his or her job. Employees who work for a company with 20 or more employees and who participated in an employer’s health insurance plan are eligible for continued health insurance coverage under the federal law known as Consolidated Omnibus Budget Reconciliation Act COBRA. COBRA, in part, amends the Employee Retirement Income Security Act (ERISA). Employees who work for a company with less than 20 employees may be eligible for continued coverage under state COBRA laws known as mini-COBRA statutes. New York and New Jersey have state COBRA statutes. COBRA applies to plans maintained by private-sector employers and sponsored by most state and local governments.
COBRA enables certain former employees, retirees, spouses former spouses, and dependent children the right to temporary continuation of health coverage at group rates. COBRA is limited to when health insurance coverage is lost due to certain specific qualifying events.
What Employment Events Trigger COBRA Coverage?
The following are some general examples of qualifying events for employees: (i) voluntary or involuntary separation of employment for reasons other than gross misconduct including a reduction in force or a layoff; or (ii) reduction in the number of hours of employment from full time to part-time causing loss of coverage.
The following are some general examples of qualifying events for spouses and dependents: (i) voluntary or involuntary separation of a covered employee’s employment for any reason other than gross misconduct; (ii) reduction in the hours worked by the covered employee from full-time to part-time causing a loss of benefits.
Qualified beneficiaries must be offered health insurance 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). If a company changes its health insurance plan, the COBRA plan would change as well.
Generally, beneficiaries (eligible former employees, spouses, and dependents) must be pay for COBRA coverage. The premium for the health insurance coverage cannot exceed 102 percent of the cost to the plan for similarly situated plan members. The beneficiary may be required the additional 2 percent for any administrative costs. Generally, the first 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. Successive payments are due each month thereafter on the date stated in the Plan. Generally, there is a 30 day grace period. If payment is not timely, the Plan has the option to cancel coverage.
Where Can I Find a Model COBRA Election Notice under Federal Law?
For your general information, a model COBRA election notice provided by the United States Department of Labor can be found on the US DOL’s site at COBRA Model Notices.
This is just a few of the many rules applicable to COBRA. If you have any questions about your rights to continue health insurance coverage, contact our COBRA Health Insurance Coverage Lawyers at (800) 893-9645.
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