How Long Does Cobra Last: Everything You Need to Know
COBRA, or The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, forces employers who have group health plans to give employees the opportunity.8 min read
How Long Does COBRA Last?
If you have wondered “how long does COBRA last?” the following information will provide the answer. COBRA, or The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, forces employers who have group health plans to give employees the opportunity to temporarily extend group health care coverage under the plan of the employer. COBRA only applies in situations when an employee would lose their coverage due to layoff, termination, or another change in the employee's employment status.
Sometimes, employees are not able to get coverage from the health insurance marketplace or through the job of their spouse. The COBRA law gives employees the option to retain their workplace health insurance a little longer, so they have time to find health insurance coverage that works well for them.
Of course, if employees choose to keep their workplace health insurance longer, they still need to pay the premiums. This may be difficult for some employees who have reduced their work hours, lost their jobs, or quit their jobs.
One of the best things about the COBRA plan is that the policy doesn't change at all except for perhaps the price. All co-pays, employee coverage limits, and deducible amounts stay the same.
How Long Must the Qualified Beneficiary Be Able to Have Access to COBRA Continuation Coverage?
COBRA coverage is available for covered employees for up to 18 months if the employees would otherwise lose coverage due to reduction of hours or termination. The coverage is also available for their spouses and dependents. If an employee is determined to be disabled within the first two months of COBRA coverage, the COBRA coverage will be available to the employee for up to 29 months. This also applies to the nondisabled qualified beneficiaries of the disabled employee. COBRA coverage is available for up to three years for dependents and spouses who are facing the loss of coverage due to a divorce or legal separation, an employee's death, or other qualifying events.
What Is the Definition of a Qualifying Event?
The requirement for a qualifying event is satisfied if the event is:
- The termination of the employee for a reason other than gross misconduct of the employee
- The death of the employee who was covered
- The reduction of the hours of the employment of the employee who is covered
- The legal separation or divorce of the employee who is covered from their spouse
- The covered employee gaining Medicare benefits under the Social Security Act's Title XVIII.
- A dependent child no longer being a dependent child of the covered employee
What Is the Definition of a Qualified Beneficiary?
A qualified beneficiary refers to an individual who is considered a beneficiary under the plan after a qualifying event occurs. The individual must be the dependent, spouse, or child of the covered employee. Covered employees are also considered qualified beneficiaries if the qualifying event is a reduction in hours or termination.
Are Newborns and Adopted Children Examples of Qualified Beneficiaries?
A child who is born to or adopted by a covered employee during the continuation coverage period under COBRA is considered a qualified beneficiary. This is true no matter when the qualifying event took place. However, the child must be enrolled within one month of adoption or birth.
What Is a Covered Employee?
A covered employee refers to an individual who receives group health plan coverage due to the individual's performance of services for the individual or individuals maintaining the plan. This definition includes self-employed persons, retirees, partners of a partnership, and independent contractors.
What Is a Dependent Child?
COBRA does not provide a definition for "dependent child." Employees need to refer to their group health plan's terms to determine who is a dependent child.
COBRA Is Applicable to Which Plans?
Just about all group health plans that employers maintain for their employees are subject to the provisions of COBRA. This includes partnerships, group health plans of corporations, state and local governments, and tax-exempt organizations. Health Care Spending Accounts are also included.
COBRA Is Not Applicable to Which Plans?
Small employer plans are not included by COBRA. If the employers maintaining the group health plan maintain fewer than 20 employees on a usual business day in the previous year, then the plan is considered a small employer plan exception. COBRA does not apply to the group health plan for the federal government. According to the Federal Employees Health Benefits Amendments Act of 1988, the federal government must give continuation coverage to its employees.
COBRA also doesn't apply to certain church plans. The IRS has arrived at the conclusion that a plan intended for employees of a higher learning institute under church auspices is considered a church plan. COBRA does not apply to such a plan.
What Is a Group Health Plan According to COBRA?
According to the COBRA statute, "group health plan" refers to a plan provided by an employer or employee organization to provide employees, former employees, and the employer with health care. The families of these individuals may also receive health care. Others associated with the employer can also receive health care from a group health plan. The plan can be self-insured, and the employer can be a self-employed individual.
Is Voluntary Termination of Employment a Qualifying Event?
Besides gross misconduct, the context of a reduction of hours or termination is irrelevant when it comes to the COBRA statute. A qualifying event result does not distinguish between whether the employee quit or was forcibly terminated.
What Triggering Events Are Considered Qualifying Events for COBRA Coverage?
COBRA requires employers to offer qualified beneficiaries a COBRA election when the following is true:
- A triggering event occurs
- The triggering event has led to or will lead to the loss of coverage during the maximum coverage period for the triggering event
If both qualifications are met, there is a qualifying event. According to COBRA, a qualifying event is a triggering event that leads to the loss of coverage for a qualified beneficiary, such as the covered employee, a dependent child, or a spouse. The qualifying event must occur while COBRA is covering the plan.
If a triggering event is experienced by the qualified beneficiary, but there is no loss in coverage that can be attributed to the triggering event, then the triggering event is not considered a qualifying event. If a triggering event is not a qualifying event, the employer does not need to offer COBRA coverage.
What Triggering Events Can Be Qualifying Events?
According to the statute, there are six triggering events that can lead to the loss of coverage. These triggering events are as follows:
- Death of the employee who is covered
- Involuntary or voluntary termination of the employment of the covered employee (the only exception is if the termination was due to gross misconduct)
- Reduction in hours of the employment of the covered employee
- Legal separation or divorce of the covered employee and their spouse
- A child losing their status as a dependent under the requirements of the plan
- The bankruptcy of the employer when it comes to health coverage for retirees and the families of the retirees.
What Triggering Events Cannot Be Triggering Events?
If an employer chooses to end a group health plan or changes it to reduce coverage, this is not considered a qualifying event under COBRA. These events are not considered qualifying events under COBRA:
- A change when it comes to insurance carriers
- Filing for divorce
- Tendering a resignation
- Employee chooses to drop coverage
- Employee chooses to resign from the Union
- Employment termination after the insurer terminates the group health plan
What Are the Two Required Items That Employers Must Send to Their Employees About COBRA?
The qualifying notice and the initial notice are the two most important notices when it comes to COBRA. Both the qualifying notice and the initial notice communicate to participants of the plan as well as to qualified beneficiaries. The initial notice includes information about COBRA obligations and rights. The qualifying notice includes information about COBRA rights and obligations when it comes to a qualifying event.
The mishandling of the notices is a major cause of liability and litigation for plans. Sometimes, the content of the notices is deficient. In other cases, the notices are not delivered at all.
When Must Covered Employees and Spouses Receive the Initial Notice?
The group health plan must send the initial notice to the covered employee and their spouse upon first receiving coverage by the group health plan in question.
What Is the Initial COBRA Notice?
The purpose of the initial COBRA notice is to provide plan participants and their spouses information about their rights under COBRA at the time at which the coverage starts under the plan.
Who Must Send the Initial Notice?
According to the statute, the group health plan is required to provide the initial notice. However, the statute does not provide a concrete definition of a group health plan. Most assume that it is the responsibility of the plan administrator to provide the initial notice. This is because the plan administrator is liable about $110 for each day they fail to provide the initial notice. The Department of Labor deems it the plan administrator's responsibility to provide the initial notice.
What Is the Qualifying Event Notice When It Comes to COBRA?
When a qualifying event occurs, and the plan administrator receives a notice, the plan administrator is responsible for sending all the qualified beneficiaries a qualifying event notice. The qualifying event notice tells qualified beneficiaries of their rights under COBRA. The plan administrator must also give the individual the right to choose COBRA.
What is Found in Qualifying Event Notices?
Qualifying event notices usually include the following:
- A cover letter that explains the COBRA rights and obligations to the qualified beneficiary
- Information about payment, election, and notice deadlines
- An election form
- An ACH notice
- A premium schedule
When Must Qualified Beneficiaries or Covered Employees Tell the Plan Administrator About Triggering Events?
The covered employee or the qualified beneficiary is required to notify the plan administrator within two months of a triggering event occurring.
When Does the Employer Need to Tell the Plan Administrator About Qualifying Events for COBRA?
The employer is required to notify the plan administrator within one month of the date of a qualifying event. These qualifying events include termination, reduction of hours, death, the commencement of Medicare coverage, or the commencement of a bankruptcy.
In this context, the "qualifying event" refers to the date of the triggering event instead of the date on which the coverage was lost.
When Do the Qualified Beneficiaries Need to Be Notified About COBRA Election?
The plan administrator is required to tell all qualified beneficiaries when it comes to a qualifying event of their right to COBRA election. The plan administrator must do this within two weeks of being notified that the qualifying event occurred.
If the plan administrator is not notified that the qualifying event took place, the plan administrator is not responsible for providing the qualified beneficiary notice about their rights to COBRA election.
When Does the Qualified Beneficiary Have to Elect COBRA?
A qualified beneficiary has about two months after the date for coverage termination to elect COBRA coverage. In some cases, the qualified beneficiary will have two months after receiving the notice to elect COBRA coverage.
This two-month period allows a qualified beneficiary to adopt an approach that involves waiting and seeing when it comes to choosing to continue coverage. The individual may elect COBRA coverage if medical care is needed during the election period.
The election period will remain open so long as the plan administrator has not sent the qualified beneficiary the notice of qualifying event. Two months is the minimum length of the election period.
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