Cobra Employer Frequently Asked Questions

What is COBRA?

• COBRA is an acronym for "Consolidated Omnibus Budget Reconciliation Act of 1985." COBRA requires employers to offer continuation of group health and/or dental benefits for a specified time to individuals who would otherwise lose coverage due to certain qualifying events.

Which employers must comply with COBRA?

• An employer who offers health benefits to its employees and who has 20 or more employees during at least 50% of the ‘typical business days’ during the previous calendar year is required to offer COBRA continuation coverage. The exceptions to this are church-plans and government plans.

What is the General COBRA Notice?

• The General (Initial Rights) Notice is sent to all of your new employees who have become eligible for benefits as an active employee. This is sent to the covered employee (and any covered dependents if applicable) to notify them of their rights and responsibilities under COBRA.

What is the Qualifying Even Notice?

• A Qualifying Even Notice (COBRA packet) is sent to any employee who is no longer employed and who was enrolled in benefits. When a covered employee or dependent becomes eligible for COBRA due to a qualifying event, we will send this notice to each qualified beneficiary to notify them of their rights under COBRA and offering them the option to elect coverage.

Who is eligible for COBRA continuation coverage?

• A Qualified Beneficiary is an individual who is now eligible for COBRA continuation coverage if the individual was covered as an active employee under an employer-sponsored group health plan prior to the qualifying event. The Qualified beneficiary can be the previous employee, and any of their previously covered dependents including a spouse.

What are Qualifying Events?

• COBRA Regulation specifies the follow six events that can be qualifying events for COBRA continuation coverage if there was a loss of coverage:
  • Death of the covered employee
  • Voluntary or involuntary termination of the covered employee's employment other than by reason of gross misconduct (note that a retirement is considered a termination of employment)
  • Reduction in hours of the covered employee's employment
  • Divorce or legal separation of the covered employee from the employee's spouse
  • Dependent child ceasing to be a dependent child under the generally applicable requirements of the plan
  • Employer goes out of business

How long may an individual remain on COBRA coverage?

• 18 months - When the qualified beneficiary is an employee and the covered spouse and dependents lose coverage due to the employee's termination of employment or reduction in hours, the employee, covered spouse and dependents may continue coverage up to 18 months.
  The 18-month continuation period may be extended to a maximum of 36 months if a second qualifying event occurs during the 18-month continuation period. The extension does not entitle the qualified beneficiary to more than 36 months of coverage.
• 29 months - A qualified beneficiary who is determined by the Social Security Administration to have been disabled within the first 60 days of COBRA coverage is eligible for the disability extension. The extension may be granted provided a determination letter issued by the Social Security Administration.
• 36 months - When the qualified beneficiary is a covered spouse or dependent child who loses coverage due to divorce or legal separation, death of the employee, the employee becomes covered by Medicare or the loss of dependent child status under the plan, coverage in force on the day prior to the qualifying event can continue for up to 36 months.

Are COBRA participants offered Open Enrollment options?

• Yes. Qualified beneficiaries have the same rights as your active employees do. This includes adding and dropping dependents at open enrollment or making plan election changes.

When does COBRA coverage terminate?

• COBRA continuation coverage may be terminated upon written request by the qualified beneficiary.
  • Coverage will terminate if the initial payment is not made by the specified date, even though the qualified beneficiary has submitted their COBRA election forms.
  • Coverage will terminate if the monthly premiums are not paid in a timely manner.
  • Coverage will terminate if the qualified beneficiary is covered under another group health plan, unless there is a pre-existing condition that would be limited or excluded under the other health plan
  • Coverage may terminate if the qualified beneficiary becomes covered by Medicare. There are exceptions to this rule.
  • Coverage will terminate if the employer ceases to provide any group health plan coverage to any employee.
  • Coverage will terminate when the COBRA continuation period ends.