What is COBRA?
In a nutshell, COBRA is the law that provides a continuation of medical benefits in the event a person becomes ineligible for his/her company sponsored insurance.
How does an person become eligible for COBRA?
To be eligible for COBRA you must have been enrolled in your employer’s health plan and the health plan must continue to be in effect for active employees. COBRA continuation overage is available upon the occurrence of a qualifying event that would cause an individual to lose his or her health care coverage such as a reduction in hours worked or loss of employment.
What health plans are subject to COBRA?
COBRA covers health plans maintained by private-sector employers, employee organizations, or local or state governments with 20 or more employees.
Are there penalties to be aware of?
Employers are responsible to ensure employees are aware of COBRA. Failure to comply with all aspects of the COBRA law can have legal ramifications, as well as financial penalties. The IRS can fine $100 per day per beneficiary for noncompliance.
What process must an individual follow to elect COBRA?
Employees must notify their plan administrator of a qualifying event within 30 days after an employee’s death, termination, reduction in hours worked, employment or entitlement to Medicare.
A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce, legal separation, or a child ceasing to be covered as a dependent under plan rules. Plan participants and beneficiaries generally must be sent an election notice no 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.
When does COBRA begin?
COBRA coverage begins on the date that health care coverage ends by reason of a qualifying event.
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 group health plans. The Department of Health and Human Services administers the continuation coverage law as it affects public-sector health plans. 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.
COBRA Resources:
http://www.dol.gov/ebsa/publications/cobraemployer.html
https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_qna.html
http://www.dol.gov/ebsa/faqs/faq_compliance_cobra.html
https://www.ebri.org/pdf/publications/facts/091605fact.pdf
