When should i be offered cobra

Under this law, group health plans include medical, prescription drug, dental and vision plans. However, a small employer exemption that applies if all employers maintaining the group health plan normally employed fewer than 20 employees on a typical business day in the preceding calendar year.

Extensions of the 18 month coverage period are available in certain circumstances, such as a disability, death, divorce of the covered employee, or a child ceasing to be a dependent under the terms of the plan. In addition, an assistance eligible individual include a person who, as of April 1, , falls within one of the categories described below:. The law requires that individuals receiving free COBRA coverage notify the group health plan of their eligibility for other group health plan or Medicare.

Individuals who fail to do so may be subject to a tax penalty. In either situation, the individual will be an assistance eligible individual only if the maximum COBRA coverage period that would have been available to that person extends past April 1, However, it also appears that if an extension of the general 18 month COBRA coverage period was provided or would have been available to an individual because of the occurrence of an intervening COBRA qualifying event e.

If any of the foregoing rules apply, the offer of extended COBRA coverage must be made available with an effective date of April 1, See discussion of notices below.

If an individual elects to be enrolled pursuant to a special enrollment right, COBRA coverage must be offered until the end of what would have been the normal expiration date for the underlying COBRA coverage period e.

Nor is it entirely clear whether a covered employee will be an assistance eligible individual if the employee had a reduction in work hours e. Nor would free COBRA coverage have to be offered prospectively to an employee whose termination of employment is on account of gross misconduct. The ARPA requires the Department of Labor to issue model notices for employers to use to advise qualified beneficiaries of their rights under the law.

Some group health plans contain a conversion option, which allows participants and beneficiaries whose coverage under the plan terminates to convert from group health coverage to an individual policy. If this conversion option is available under the plan to active employees and their families, qualified beneficiaries whose maximum period of continuation coverage ends also must be given the option to convert to an individual policy.

The conversion option must be offered not later than days before continuation coverage ends. The option to convert, however, need not be provided if continuation coverage is terminated before the end of the maximum period for which it was made available.

The following chart shows the maximum period for which continuation coverage must be offered for the specific qualifying events and the qualified beneficiaries who are entitled to elect continuation coverage when the specific event occurs.

Note that an event is a qualifying event only if it would cause the qualified beneficiary to lose coverage under the plan. Qualifying Event. Termination for reasons other than gross misconduct or reduction in hours of employment. Qualified Beneficiaries. Group health plans can require qualified beneficiaries to pay for COBRA continuation coverage, although plans can choose to provide continuation coverage at reduced or no cost.

The maximum amount charged to qualified beneficiaries cannot exceed percent of the cost to the plan for similarly situated individuals covered under the plan who have not incurred a qualifying event. In calculating premiums for continuation coverage, a plan can include the costs paid by both the employee and the employer, plus an additional 2 percent for administrative costs.

COBRA charges to qualified beneficiaries may be increased if the cost to the plan increases but generally must be fixed in advance of each month premium cycle.

The plan must allow qualified beneficiaries to pay the required premiums on a monthly basis if they ask to do so, and may allow payments at other intervals for example, weekly or quarterly.

Qualified beneficiaries cannot be required to pay a premium in connection with making the COBRA election. Plans must provide at least 45 days after the election that is the date the qualified beneficiary mails the election form if using first-class mail for making an initial premium payment.

The plan should establish due dates for any premiums for subsequent periods of coverage, but it must provide a minimum day grace period for each payment. Plans are permitted to terminate continuation coverage if full payment is not received before the end of a grace period.

If the amount of a payment made to the plan is wrong, but is not significantly less than the amount due, the plan must notify the qualified beneficiary of the deficiency and grant a reasonable period for this purpose, 30 days is considered reasonable to pay the difference.

The plan is not obligated to send monthly premium notices, but is required to provide a notice of early termination if continuation coverage is terminated early due to failure to make a timely payment. Certain individuals may be eligible for a Federal income tax credit that can help with monthly COBRA premium payments. The HCTC is available to certain workers who lose their jobs due to the effects of international trade and who qualify for trade adjustment assistance TAA , as well as certain individuals who are receiving pension payments from the Pension Benefit Guaranty Corporation PBGC.

Individuals who are eligible for the HCTC may choose to have the amount of the credit paid on a monthly basis to their health coverage provider as it becomes due, or may claim the tax credit on their income tax returns at the end of the year.

The tax credit has increased to 80 percent of qualified health insurance premiums. The 80 percent tax credit began in May They may continue receiving the HCTC for up to 24 months after the primary eligible individual enrolls in Medicare, gets divorced or dies. At the time of this printing, these changes to the HCTC — including the new timeframes for extended benefits — are only valid through December 31, HIPAA requires that a group health plan or health insurance issuer provide a certificate of health coverage automatically to individuals entitled to elect COBRA continuation coverage, at a time no later than when a notice is required to be provided for a qualifying event under COBRA, and to individuals who elected COBRA coverage, either within a reasonable time after learning that the COBRA coverage has ceased, or within a reasonable time after the end of the grace period for payment of COBRA premiums.

When an employee or dependent of an employee loses eligibility for other health coverage, a special enrollment right may be triggered. COBRA continuation coverage laws are administered by several agencies. The Departments of Labor and the Treasury have jurisdiction over private-sector group health plans. The Department of Health and Human Services administers the continuation coverage law as it affects State and local government health plans.

The Treasury Department has interpretive responsibility to define the required continuation coverage. The Departments of Labor and the Treasury share jurisdiction for enforcement of these provisions. Government, Department of Labor. In certain circumstances, qualified beneficiaries entitled to 18 months of continuation coverage may become entitled to a disability extension of an additional 11 months for a total maximum of 29 months or an extension of an additional 18 months due to the occurrence of a second qualifying event for a total maximum of 36 months.

Introduction Health insurance is one of the most important benefits that employers can provide for their employees. Group Health Plans Subject to COBRA COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. COBRA Continuation Coverage COBRA requires group health plans to offer continuation coverage to covered employees, former employees, spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain specific events.

Who Is Entitled to Continuation Coverage? The general notice must include: The name of the plan and the name, address, and telephone number of someone whom the employee and spouse can contact for more information on COBRA and the plan; A general description of the continuation coverage provided under the plan; An explanation of what qualified beneficiaries must do to notify the plan of qualifying events or disabilities; An explanation of the importance of keeping the plan administrator informed of addresses of the participants and beneficiaries; and A statement that the general notice does not fully describe COBRA or the plan and that more complete information is available from the plan administrator and in the SPD.

The employer has 30 days after the event occurs to provide notice to the plan. COBRA Election Notice After receiving a notice of a qualifying event, the plan must provide the qualified beneficiaries with an election notice, which describes their rights to continuation coverage and how to make an election. COBRA Notice of Unavailability of Continuation Coverage Group health plans may sometimes deny a request for continuation coverage or for an extension of continuation coverage, when the plan determines the requester is not entitled to receive it.

Election Procedures COBRA requires group health plans to give qualified beneficiaries an election period during which they can decide whether to elect continuation coverage, and COBRA also gives qualified beneficiaries specific election rights. Duration of Continuation Coverage Maximum Periods COBRA requires that continuation coverage extend from the date of the qualifying event for a limited period of time of 18 or 36 months. Extension of an month Period of Continuation Coverage There are two circumstances under which individuals entitled to an month maximum period of continuation coverage can become entitled to an extension of that maximum.

Disability If one of the qualified beneficiaries in a family is disabled and meets certain requirements, all of the qualified beneficiaries in that family are entitled to an month extension of the maximum period of continuation coverage for a total maximum period of 29 months of continuation coverage. Second Qualifying Event An month extension may be available to qualified beneficiaries receiving an month maximum period of continuation coverage giving a total maximum period of 36 months of continuation coverage if the qualified beneficiaries experience a second qualifying event that is death of the covered employee, divorce or legal separation of the covered employee and spouse, Medicare entitlement, or loss of dependent child status under the plan.

Conversion Options Some group health plans contain a conversion option, which allows participants and beneficiaries whose coverage under the plan terminates to convert from group health coverage to an individual policy. Summary of Qualifying Events, Qualified Beneficiaries, and Maximum Periods of Continuation Coverage The following chart shows the maximum period for which continuation coverage must be offered for the specific qualifying events and the qualified beneficiaries who are entitled to elect continuation coverage when the specific event occurs.

Under COBRA, certain retirees and their family members who receive post-retirement health coverage from employers have special COBRA rights in the event that the employer is involved in bankruptcy proceedings begun on or after July 1, Members may download one copy of our sample forms and templates for your personal use within your organization.

Neither members nor non-members may reproduce such samples in any other way e. According to the U. Department of Labor, a qualified beneficiary is:. In certain cases involving employer bankruptcy, a retired employee and their spouse, former spouse, or dependent children may be qualified beneficiaries. In addition, any child born to or placed for adoption with a covered employee during a period of continuation coverage is automatically considered a qualified beneficiary.

When determining whether or not an employee is a qualified beneficiary, keep the following in mind:. While federal COBRA only applies to employers with 20 or more employees, state laws often require continuation coverage for smaller employers. You may be trying to access this site from a secured browser on the server. Please enable scripts and reload this page. September 15, Reuse Permissions. Page Content. When determining whether or not an employee is a qualified beneficiary, keep the following in mind: If the employee was covered under the group health plan the day before the qualifying event, the employee and their dependents will be eligible for COBRA regardless of whether the employee voluntarily resigned or was involuntarily terminated.