AAML: COBRA

What are the basic requirements for COBRA coverage?

1. Group health plan must be covered by COBRA; 2. Qualifying event must occur; 3. Must be a qualified beneficiary for that event.

What are the qualifying events for the spouse and dependent child of the qualified employee

1. termination of employment for any reason other than "gross misconduct" 2. reduction in the ## of hours worked by covered employee 3. covered employee becomes entitled to Medicare 4. divorce or legal separation from covered employee 5. death of the covered employee

What are the qualifying events for the employee?

1. termination of employment for any reason other than "gross misconduct" 2. reduction in the ## of hours;

How long do the benefits extend if the qualifying event is the employee's termination of employment or reduction in hours?

18 months unless the employee qualifies for Medicare during those 18 months, in which case coverage for spouse and dependents can last 36 months.

Other than employee termination/reduction in hours, how long do the benefits extend in other qualifying events?

36 months.

What is a certificate of creditable coverage?

A statement showing the amount of creditable coverage to reduce the preexisting condition exclusion period.

What is a group health plan under COBRA?

Any arrangement that an employer establishes or maintains to provide employees or their families with medical care, whether it is provided through insurance, by a health maintenance organization, out of the employer's assets on a pay as you go basis or otherwise. Medical care includes hospital care (in or outpx), physician care, surgery and other major medical, prescription drugs, dental and vision care.

Can COBRA Premiums change?

Can be generally, but must be fixed in advance of each 12 month premium cycle.

Who oversees COBRA?

Dept of Labor (interpretation re disclosure and notification requirements) and Treasury have jurisdiction over private sector plans. Dept of Health and Human Services in public sector plans. IRS has regs on COBRA provisions.

COBRA General Notice

Describes COBRA Rights within 90 days of coverage. SPD can satisfy.

Who needs to elect?

Each of the beneficiaries for the qualifying event. However, parent/guardian can decide for dependent QB.

COBRA Qualifying Event Notices

Employer must notify plan in 30 days if Qualifying Event is termination or reduction in hours of the covered employee; death of employee; employee being entitled to Medicare; or bankruptcy of employer. Covered employee or qualified benefiary must notify plan if qualifying event is divorce, legal separation, a child's loss of dependency status. The plan may have rules about how to provide that notice, but it can't be shorter than 60 days of date of qualifying date, date on which loss of coverage would result from qualifying event, or date on which you are informed through SPD/COBRA general notice of responsibility to notify plan. If not clear what to do, give notice by contacting employee benefits peronsnel.

What are qualifying events?

Events that cause individual to lose his group health coverage. The type of event determines who the qualified beneficiaries are for the eevent and the period of time that aplan must offer continuation coverage. COBRA provides the baseline of continuation requirements; plans can make it easier.

What is the length of time that continuation benefits extend?

From 18-36 months, depending upon the type of qualifying event. Plan can make longer.

Can the person losing health coverage buy an individual policy?

HIPAA gives individuals who are losing group health coverage and who have at least 18 months of creditable coverage without a break in coverage of 63 days or more the right to buy an individual policy that does not include a pre-existing condition exclusion period.

How does COBRA affect teh HIPAA time limits on preexisting condition exclusions?

HIPAA requires any exclusion period to be reduced by an individual's # of days of creditable coverage that occurred without a break in coverage of 63 days or more. COBRA is creditable coverage.

What types of health plans are covered by COBRA?

Health plans sponsored by an employer (private sector or state/local government) that employed at least 20 employees on more than 50% of its typical business days in the previous calendar year. Full and PT employees are counted. Each PT employee counts as a fraction of a FT employee based on # of hours worked/# of hours required for FT

Conversion to individual plan

If plan gives participants and beneficiaries whose coverage under the plan terminates the option to convert from group to individual coverage, plan must give QB the option not later than 180 days before the end of continuation benefits. Premium may be more expensive, and coverage may not be as good. Cannot exercise this if you terminated coverage before end of max period of coverage.

What happens if continuation coverage is waived?

If waived during the election period, it can be revoked. Under these circumstances, plan is required to provide continuation coverage on the date waiver is revoked.

Who are the qualified beneficiaries of a plan when it goes into bankruptcy?

In addition to employees and related beneficiaries, retired employees, spouses of retired employees, divorced spouses of retired employees, and the retired employee's dependent children.

How premiums paid

Monthly but may allow otherwise. No payment required with election but can be required within 45 days of election. Failure to pay can result in lack of continuation. Must provide a 30 day grace period for payment of premiums. Plan can cancel coverage during time of unpaid grace. If full amount is not paid but it is not significantly less, should be given 30 days to pay. Monthly premium notices are not required.

COBRA Notice of Unavailability of Continuation Coverage

Must be provided within 14 days after the request is received, and must explain reason for denial.

COBRA Notice of Early Termination of Continuation Coverage

Must generally be provided for max period (18, 29 or 36 months). Plan may termination continuation coverage ealier, but must provide a notice as soon as practicable after the decision is made. Describes date of termination, reason, and any rights the qualified beneficiary may have under the plan or applicable law to elect alternative group or individual coverage.

When must COBRA plans provide certificates of creditable coverage?

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 tima after the end of the grace period for payment of COBRA premiums.

Are life and/or disability benefits covered under COBRA?

No.

Is coverage under the Family and Medical Leave Act (FMLA) related to COBRA?

No.

Can a person that is losing entitlement to health coverage seek to special enroll in another plan before the end of the continuing coverage (if that was first elected)?

No. Must have exhausted continuation coverage ... so max period of continuation coverage without early termination. Must request special enrollment within 30 days of the loss of the continuation coverage.

What notice requirements does COBRA impose?

Plans must have a summary plan description, COBRA general notice, COBRA qualifying events notice, COBRA election notice, COBRA notice of unavailability of continuation coverage, COBRA Notice of Early Termination of Continuation Coverage, Special Rules for Multiemployer plans

What is COBRA designed generally to do?

Provide a temporary continuation of group health coverage that otherwise might be terminated.

What steps should a person no longer entitled to health benefits take?

Should look into special enrollment in other health plans. Under the Health Insurance Portability and Accountability Act (HIPAA), if you or your dependents are losing eligibility for group health coverage, including continuation coverage, you may have a right to special enroll (enroll without waiting until the next open season for enrollment) in other group health coverage. Must seek that coverage withhin 30 days of the loss of the other coverage.

What is the full title for the COBRA statute?

The 1986 Consolidated Omnibus Budget Reconciliation Act

Summary Plan Description

The COBRA rights under the plan must be described in this description that gives important informatin about the plan, including what benefits are available, the right of participants nad beneficiaries under the plan and how the plan works. Must be given to employee within 90 days (or 120 days after becomes subject to ERISA reporting). Material changes within 210 days, or 60 days if material reduction in covered services. Must be provided within 30 days of request.

How much time does the qualified beneficiary have to elect?

The QB must have at least 60 days starting on the later of the date provided election notice or date would lose coverage to choose whether or not to elect continuation coverage.

What about workers who lose jobs due to international trade?

The Trade Adjustment Assistance Act of 2002 allows them a second op to elect continuation coverage.

What is the health coverage tax credit?

The Trade Adjustment Assistance Act of 2002 created the Health Coverage Tax Credit, an advancable, refundable tax credit for up to 65% of the premiums paid for certain types of health insurance premiums (including COBRA). Applies to certain workers who lose work due to international trade, people receiving benefits under the Pension Benefit Guaranty Corp. Can be applied to premium or on tax returns. As of 2009, it's 80% of premiums.

Special Rules for Multiemployer Plans

These plans can have uniform time limits for qualifying event notice or election notice. May not require employers to provide qualifying event notices, and instead have plan administrator decide. SPDs must describe these special rules.

COBRA Election Notice

Upon receipt of a notice of qualifying event, Plan must give beneficiaries an election notice describing rights to continuation coverage and how to elect. Within 14 days after receives notice of qualifying event.Provides all info re understanding the continuation coverage, and name of administrator.

When can the 18 month continuation be extended?

When the qualified beneficiary is disabled, or when a second qualifying event occurs. All QBs are entitled to an 11 mo extension to max period (29 mos). Can charge an increased premium (150% of cost of coverage) during 11 mo disability extension. SSA must qualify disability during the entire period, and the plan must be notified of the SSA determination within 60 days (or longer if plan allows) of qualifying event, QB loses coverage as a result of the even; date on which QB learns through plan of responsibility to notify plan; and date on which SSA issues disability determination. These notices should be provided in the SPD.

When continuation is 18 months, can it be extended another 18 months?

Yes, if the qualifying event is the death of the covered employoee or the divorce/legal separatioin of the covered employee and spouse, a covered employee being entitled to Medicare, or loss of dependent child status under the plan. Second qualifying event is a qualifying event if it would have caused loss of coverage in absence of first qualifying event. Must notify the plan. SPD should explain how. Deadline for notice cannot be shorter than 60 days from latest of (1) date on which qualifying event occurs; 2. date on which you would lose coverage under the plan as a result of the qualifying event; and 3. date on which you are informed through the SPD or COBRA notices of need to notify the plan.

Are other government sponsored plans available to those losing coverage?

Yes. Pre-existing condition insurance plans and child's health insurance program.

What are the time limits on COBRA for divorcing spouse?

You must tell the health plan administrator about the change in your marital status within 60 days of your divorce. The administrator then has 14 days to tell you how to make an election to continue your health coverage under COBRA. You then have 60 days to make the election.

What is a qualified beneficiary of a plan?

an individual who was covered by a group health plan on the day before a qualifying event occurred that cuased him to lose coverage.

What health Plans does COBRA apply to?

group health plans maintained by private-sector employers (with at least 20 employees) or by state or local governments. Does not apply to plans sponsored by the federal government or by churches and certain church related organizations.

What other qualifying event is there for an employee's dependent child?

loss of dependent child status under the plan.

What rights does an child born to or adopted by the employee have during continuation periods?

same as natural or adopted child prior to continuation benefits.

How much is the beneficiary of COBRA charged for the premium?

the full cost of coverage plus a 2% administration charge

What kind of coverage does the qualified beneficiary receive?

the same provided to similarly situated active employees and their families. During open enrollment, can elect a different plan. Same rules and limits apply (such as co-payment, deductibles and coverage limits). Any changes to plan will also apply.