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Insurance & Employee Benefits
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Continuation of Health Coverage — COBRA
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 such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.
COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice.
Source: US Department of Labor as of February 16, 2011
http://www.dol.gov/dol/topic/health-
IMPORTANT LINKS
An Employer's Guide to Health Continuation Coverage Under COBRA
HCTC-
Over the past few years, COBRA compliance has become increasingly difficult as many of the regulations have been changing to meet the needs of the economy. This was evident with the passage of the American Recovery and Reinvestment Act or ARRA. Besides the increased amount of administrative work the federal government imposed on organizations, many states have their own requirements that also increase the load. If an organization violates the rights of a individual who qualifies for continuation of coverage, whether intentional or not, the fines can be substantial, besides the potential liability exposure. Therefore it is important to maintain compliance.
Our office works with various COBRA Administrators whose job is to ensure organizations maintain proper stature with the US Department of Labor and other regulatory agencies.
QUESTIONS FOR THE ORGANIZATION OR BUSINESS
How many employees are employed? Federal law dictates draws the line at 20 employees whereas states usually have requirements for less.
Are model notices sent our during the enrollment period? If not, how are the dependents notified of their rights?
Did you know that a 2% charge can be added to the premium to help cover the cost associated with the administration? Refer to dol.gov for more details.
When does the employer have to notify the eligible participants and their dependents? 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.
How long does the eligible participant or the dependent have to elect coverage? The individual has 60 days to decide whether to elect COBRA continuation coverage.
If COBRA coverage is elected, when does the premium have to be paid by participant? The person then has 45 days after electing coverage to pay the initial premium.
What happens if the individual doesn’t pay the premium? The employer has the right to request cancellation (refer to dol.gov).
Low Cost & Affordable COBRA Administration
COBRA Administration Services