Cobra Eligibility

Cobra eligibility means that the eligible individual meets all the requirements listed in the Consolidated Omnibus Budget Reconciliation Act. Enacted by the United States Congress in 1985, the Consolidated Omnibus Budget Reconciliation Act (COBRA) demands that employers with group healthcare insurance plans to provide employees the temporary option of continued group health coverage, if the coverage would otherwise end du

e to change of employment status due to layoff or termination. COBRA requires that three (3) requirements be met before an insured can qualify for coverage: (i) an employer is obligated to COBRA coverage of employees; (ii) that the employee was a Qualified Beneficiary; and (iii) that a Qualifying Event has occurred. COBRA insurance coverage is in effect for up to eighteen (18) months; although some insured retain coverage a few months longer.

COBRA continuation coverage

COBRA insurance coverage applies to individuals covered under an employer's existing group health insurance plan. COBRA applies to medical, dental, and Employee Assistance Plans or "EAPs", and other plans. Employers must notify the health plan administrator within 30 to 60 days after the reporting of an employee's "qualifying event". The employee and dependents have 60 to elect continue healthcare coverages with COBRA. 

Cafeteria plan (as defined in Section 125) provision by an employer via the insurer is the basis to a group health plan under COBRA. The COBRA continuation coverage requirements of section 162(k) apply to those medical benefits under the cafeteria plan, or other coverage arrangement an insured employee has elected. Moreover, with exception to cases where the insurance plan is exempt from HIPAA, COBRA is solely offered where a participant has a positive balance in their account at the time of termination, and only up to the end of the current plan year.

Employers who fail to notify a qualifying beneficiary of his or her COBRA rights may face penalties. Employers who do not offer health coverage in general or who go "out of business" are not required under law to offer COBRA continuing health coverage.

Cobra Eligibility

Full-time and part-time employees may sign-on to COBRA healthcare insurance coverage if eligible under federal rules to continuing coverages. Eligibility guidelines outline the rules to qualified beneficiaries, and to qualifying events of COBRA insurance. According to the U.S. Department of Labor (DOL), an employer must employ at least twenty (20) or more employees to be eligible for group healthcare insurance plan benefits under COBRA, and of those employees 50% or more must be present on a typical business day during the past calendar year to meet COBRA guidelines.

COBRA Qualified Beneficiary

Employees eligible for COBRA must meet the criteria to "qualifying beneficiary". Discharged or terminated employees, and spouses or dependent children may or may not qualify depending on the terms of the circumstances of the stated "qualifying event". There are some instances that employees lose access to healthcare coverage, and are therefore ineligible for COBRA. Individuals who have lost a job, or been subject to a reduction in hours, or have filed for divorce, or legal separation should review guidelines to COBRA rules to ensure that they meet the qualified beneficiary guidelines to plan coverage:

  • Immediately before the qualifying event is the dependent child or spouse of a covered employee.
  • Immediately before the qualifying event is a covered employee (i.e. reduction in hours, or termination).
  • Is a newborn or adopted child is covered by the insured when enrolled within the first thirty (30) days.

COBRA Qualifying event

The conditional criteria to a COBRA “qualifying event” are:

  • Death of the insured.
  • Termination or reduction of hours.
  • Divorce or separation.
  • Entitlement to Medicare benefits.
  • A child is no longer to be a dependent.

COBRA Non- qualifying event

Qualifying Events for COBRA are events that affect employment status. Events solely affecting the type of health insurance plan offered by an employer offers are not Qualifying Events. Fully employed employees are non-qualifying COBRA applicants. Employer changes or conclusion of a sponsored health insurance plan may make an employee ineligible.

What is COBRA plan coverage?

COBRA insurance coverage applies to individuals covered under an employer's existing group health insurance plan. COBRA applies to medical, dental, and Employee Assistance Plans or "EAPs", and other plans. Employers must notify the health plan administrator within 30 to 60 days after the reporting of an employee's "qualifying event". The employee and dependents have 60 to elect to continue of health coverages with COBRA. 

Employer group health plans are guided by COBRA’s stipulated rules to category of organization: corporations, tax exempt organizations, partnerships, and state and local governments. The “small employer plan exception” applies to employers with less than twenty (20) employees maintaining a plan. The Federal government’s group healthcare plan is not falling under the same rules as COBRA.

Some church organization health plans also are not falling under COBRA guidelines.

How to Apply for COBRA Coverage?

When an employee is preparing to leave employment, the employer must provide COBRA information with the steps to extend group health care insurance plan coverage on exit within fourteen (14) days of notice. Employees have sixty (60) days to decide to continue your coverage with COBRA to avoid gaps in insurance coverage under the former arrangement. Former employees are obliged to pay COBRA premiums during the period of coverage. COBRA coverage expense submission is backdated to cover any medical expenses incurred during the coverage period.

Length of COBRA Coverage

Insured are eligible for COBRA coverage if covered under the group health plan on the day before a qualifying event. COBRA continuation coverage will be available up to:

  • Eighteen (18) months for covered employees and their dependents.
  • Twenty-nine (29) months for employees who are determined to have been disabled at any time during the first sixty (60) days. COBRA coverage also applies to the disabled employee’s non disabled qualified beneficiaries.
  • Thirty-six (36) months for beneficiaries facing a loss of employer-provided coverage due to the death, divorce or legal separation or an employee, or certain other “qualifying events”.

The Rules for Beginning COBRA

COBRA rules require that all qualified beneficiaries be eligible and entitled to elect COBRA coverage.

In cases where insured have an option of different types of coverage under an employer health care insurance plan, qualified beneficiaries are entitled to elect from those options at time of open enrollment.

COBRA mandates employers offer election of qualified benefits in cases where there has been a triggering event. A COBRA “qualifying event” is a triggered event, “which, but for the continuation coverage required (by COBRA), would terminate the insurance coverage of a qualified beneficiary.”  COBRA rules identify six (6) eligible triggering events as qualifying events: (1) death; (2) termination due to gross misconduct; (3) reduction in hours; (4) spousal divorce or legal separation; (5) a child ceases to be a dependent; and (6) employer bankruptcy.

How Does My Health Plan Know to Offer Me COBRA?

When an employee is hired, they are informed of COBRA healthcare insurance coverage. The initial notice informs the plan participant and dependents of their rights to health insurance under COBRA. The initial notice is given “at the time of commencement of the coverage under the plan,” and is sent by the group healthcare insurer to the covered employee and family at time of joining. 

Qualifying events must be noticed to the healthcare plan administrator that an event has taken place. The qualifying event notice must be sent by the plan administration to individual qualified beneficiaries to advise them of their rights under COBRA, and terms and conditions to election of COBRA.

Employers who fail to notify a qualifying beneficiary of his or her COBRA rights may face penalties. Employers who do not offer health coverage in general or who go "out of business" are not required under law to offer COBRA continuing health coverage.

How to Prepare for the End of Your COBRA Coverage

Before the new healthcare law known as the Affordable Care Act (ACA) became law, patients with a pre-existing condition like cancer could be charged more or denied insurance coverage by private insurers. As result, COBRA has usually been the sole healthcare insurance coverage available to cancer patients and cancer survivors who have been employed at the time of the qualifying event.

The ACA potentially made healthcare insurance plans more affordable for cancer care. ACA was especially created with cancer patients and survivors in mind. The state insurance marketplace established by the ACA focuses on offering more healthcare insurance plan options to people who do not have access to COBRA through their employers.

ACA can also assist those leaving their employment and will lose their current group insurance plan.

For some people, this has been more beneficial, as buying insurance through a state marketplace will at times cost less than COBRA.

Paying for COBRA

Qualifying individuals are required to make premium payments to their COBRA health plan during the coverage time-period. The premium for COBRA coverage equals the full cost of your group health coverage – including the employee and employer share – in addition to up to 2 percent more for administrative costs. The cost is typically more than you paid when you were employed with the company, since the company then typically paid for part of the premium.

Some employers might provide you with the option of dropping out of “non-traditional” insurance plans, such as vision and dental coverage, to decrease costs. If you have already had the 18-month standard COBRA coverage and have begun the 11-month disability extension, the premium may be much higher, the employer may charge up to 150 percent of the actual insurance cost.

Employees can consider buying a COBRA plan when they:Are pregnant or will be pregnant within the COBRA consideration period.

  • Have medical record of a pre-existing condition.
  • Are under medical supervision for prescription medications, and will undergo a extensive medical care or procedure.
  • Have been rejected by a private healthcare insurance provider, recently.

Employees can consider purchasing an individual or family if:

  • They have a healthy medical record.
  • The COBRA plan is expensive.
  • They require healthcare insurance coverage pas the term of COBRA 18 months.
  • They require a short-term, low cost plan.

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