What does COBRA stand for?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1986.
What does COBRA do?
COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. However, this coverage is only available when coverage is lost due to certain specific events, and the total cost of the policy, plus an administration fee, is paid by the person electing the continuation coverage.
How does a person become eligible for COBRA Continuation Coverage?
To be eligible for COBRA coverage, you must have been enrolled in your employer’s health plan when you were employed and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a Qualifying Event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage
What is a Qualifying Event?
A Qualifying Event is an event that will cause the covered employee or the covered dependent(s) to lose coverage under the plan. These events are as follows:
• Termination of a covered employee’s employment (other than for gross misconduct)
• A reduction in a covered employee’s hours of employment
• The death of a covered employee
• A divorce or legal separation from the covered employee
• Ceasing to be a dependent child under the terms of the plan
• The covered employee becomes entitled to Medicare
• Employer bankruptcy (related only to retiree plans)
What is a Qualified Beneficiary?
A Qualified Beneficiary is an individual covered by a group health plan on the day before a Qualifying Event occurs.
How long after a Qualifying Event do I have to elect COBRA Continuation Coverage?
Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA continuation coverage. A covered employee or the covered employee’s spouse may elect COBRA continuation coverage on behalf of all other qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child. Qualified beneficiaries must be given at least sixty (60) days for the election. This period is measured from the later of the coverage loss date or the date the COBRA Election Notice is provided. The Election Notice may be provided in person or by first class mail, but must be provided within fourteen (14) days after the plan administrator receives notice that a Qualifying Event has occurred.
Can individuals qualify for longer periods of COBRA continuation coverage?
Yes. Disability can extend the eighteen (18) month period of continuation coverage for a Qualifying Event that is a termination of employment or reduction of hours. To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must:
• Have a ruling from the Social Security Administration that he or she became disabled within the first sixty (60) days of COBRA continuation coverage.
• Send the plan a copy of the Social Security ruling letter within sixty (60) days of receipt, but prior to expiration of the eighteen (18)-month period of coverage.
If these requirements are met, the entire family qualifies for an additional eleven (11) months of COBRA continuation coverage. Plans can charge 150% of the premium cost for the extended period of coverage.
When does COBRA Continuation Coverage begin?
COBRA continuation coverage begins on the date that health care coverage would otherwise have been lost by reason of a Qualifying Event.
If I elect COBRA, how much do I pay?
When you were an active employee, your employer may have paid all or part of your group health insurance premiums. Under COBRA, as a former employee no longer receiving benefits, you will usually pay the entire premium amount, which is the portion of the premium that you paid as an active employee and the amount of the employer contribution. In addition, there may be a two (2) percent administrative fee.
While COBRA rates may seem high, you will be paying group premium rates, which are usually lower than individual rates.
Since it is likely that there will be a lapse of a month or more between the date of layoff and the time you make the COBRA election decision, you may have to pay health premiums retroactively from the time of separation from the company. The first premium, for instance, will cover the entire time since your last day of employment with your former employer.
You should also be aware that it is your responsibility to pay for COBRA continuation coverage even if you do not receive a monthly statement.
Under COBRA, what benefits must be covered?
Qualified beneficiaries must be offered coverage identical to that available to similarly situated beneficiaries who are receiving coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation of coverage). A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. Qualified beneficiaries under the plan must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.
Why should I elect COBRA?
One of the primary reasons people elect COBRA continuation coverage is to avoid breaks in coverage. A 63-day break in coverage may subject participants to a preexisting condition exclusion from future group health plans. If you have creditable coverage from another plan, then you can receive a reduction or elimination of these exclusionary periods. You should be provided a certificate of creditable coverage, free of charge, from your insurance carrier when you lose coverage under your plan, you become entitled to elect COBRA continuation coverage, your COBRA continuation coverage ceases, if you request it before losing coverage, or if you request it up to 24 months after losing coverage. Without evidence of creditable coverage, you may be subject to a preexisting condition exclusion for 12 months (18 months for late enrollees) after your new plan’s enrollment date.
How do I elect COBRA?
A qualified beneficiary should notify his/her insurance coordinator if a Qualifying Event occurs. The insurance coordinator will then send a Qualifying Event notification and an election form to employees and/or their covered dependents that are entitled to COBRA coverage. Please be advised that it is your responsibility to inform your insurance coordinator of any address change for you, your spouse, or your dependents so that COBRA information can be mailed to the current address.
Where can I obtain additional information regarding COBRA?
Your first step for questions, election information and notification of Qualifying Events is to contact your agency’s health insurance coordinator. Your insurance coordinator will be able to help you work through questions and start the COBRA continuation coverage process.
You can also contact the Department for Employee Insurance. The Department for Employee Insurance has COBRA specialists that can assist in difficult to administer areas of COBRA or assist in the COBRA process.
The Department for Employee Insurance also maintains current COBRA information on its Web site at [ http://personnel.ky.gov/stemp/dei/05planyear/cobra.htm] .
Initial COBRA Notice
At the time of employment, you should have received the following letter regarding your COBRA continuation rights.
General Notice of Right to Continuation of Group Health Insurance Coverage
You are receiving this notice because you have become covered under a group health plan (the Plan). This notice contains vital information regarding you and your dependents’ rights for continuation of group health insurance. This notice was designed to give you a summary of COBRA and what rights you and your dependents have upon your loss of group health coverage.
The right to COBRA continuation coverage was created by a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). COBRA continuation coverage is available at your election when you would otherwise lose your group health coverage. It is also available to other members of your family who are covered under the Plan when they would otherwise lose their group health coverage. For additional information about your rights and obligations under the Plan and under federal law, you should contact the personnel representative at your agency of employment.
What is COBRA continuation coverage?
COBRA continuation coverage is a continuation of Plan coverage when coverage would otherwise end because of a life event known as a “Qualifying Event”. Specific Qualifying Events are listed later in this notice. After a Qualifying Event, COBRA continuation coverage must be offered to each person who is a “qualified beneficiary”. If coverage under the Plan is lost because of the Qualifying Event, then you, your spouse and your dependent children could become qualified beneficiaries. Under the Plan, qualified beneficiaries are responsible for payment of COBRA continuation coverage.
If you are an employee, you will become a qualified beneficiary if you lose coverage under the Plan because either one of the following Qualifying Events occurs:
• Your hours of employment are reduced, or
• Your employment ends for any reason other than your gross misconduct.
If you are the spouse of an employee, you will become a qualified beneficiary if you lose your coverage under the Plan because any of the following Qualifying Events occur:
• Your spouse dies;
• Your spouse’s hours of employment are reduced;
• Your spouse’s employment ends for any reason other than his or her gross misconduct;
• Your spouse becomes enrolled in Medicare (Part A, Part B or both); or
• You become divorced or legally separated from your spouse.
Your dependent children will become qualified beneficiaries if they lose coverage under the Plan because any of the following Qualifying Events occur:
• The parent-employee dies;
• The parent-employee’s hours of employment are reduced;
• The parent-employee’s employment ends for any reason other than gross misconduct;
• The parent-employee becomes enrolled in Medicare (Part A, Part B or both);
• The parents becomes divorced or legally separated; or
• The child stops being eligible for coverage under the plan as a “dependent child”.
When is COBRA Coverage Available?
Once the Plan Administrator has been notified that a Qualifying Event has occurred, then the Plan will offer COBRA continuation coverage to qualified beneficiaries. When the Qualifying Event is the end of employment or a reduction of hours of employment, death of the employee, or the employee becoming entitled to Medicare benefits (under part A, Part B or both), the employer must notify the Plan Administer of the Qualifying Event.
You must Give Notice of Some Qualifying Events
For other Qualifying Events (divorce, legal separation of the employee and the spouse or a dependent child’s losing eligibility for coverage as a dependent child), you must notify the Department for Employee Insurance within sixty (60) days after the Qualifying Event occurs. You must provide this to your Insurance Coordinator at your place of employment.
Length of COBRA Coverage Period
Listed below is the maximum period COBRA continuation coverage is available.
Qualifying Events that entitle you to COBRA continuation coverage Length of COBRA continuation coverage
Termination of employee’s employment (except for gross misconduct)
(Former employee and covered dependents) 18 Months
Reduction of the employee’s hours
(Former employee and covered dependents) 18 Months
Death of a covered employee
(Spouse and covered dependents) 36 Months
Divorce or legal separation from the covered employee
(Spouse and covered dependents) 36 Months
Employee becomes entitled to Medicare (Part A, Part B or both)
(Spouse and covered dependents) 36 Months
Dependent child covered under plan ceases to be an eligible dependent under the plan 36 Months
Person considered to have total disability, according to the Social Security Administration 29 Months
What events permit an extension of COBRA Continuation Coverage?
COBRA continuation coverage can be extended in one of two ways, which provides an extended period of time for certain Qualifying Events. Listed below are the two ways in which COBRA continuation coverage may be extended. Both require the covered employee to have incurred the first Qualifying Event of termination of the covered employee’s employment or reduction of a covered employee’s hours.
Disability extension of 18-month period of continuation coverage
If you or anyone in your family covered under the Plan is determined by the Social Security Administration to be disabled and you notify the Department for Employee Insurance and your Carrier in a timely fashion, you and your entire family may be entitled to receive up to an additional eleven (11) months of COBRA continuation coverage, for a total maximum of twenty-nine (29) months. The disability must begin before the sixtieth (60th) day of COBRA continuation coverage and must last at least until the end of the eighteenth (18th) month period of continuation coverage.
Second Qualifying Event extension of 18-month period of continuation coverage
If your family experiences another Qualifying Event while receiving eighteen (18) months of COBRA continuation coverage, the spouse and dependent children can get an extension of up to eighteen (18) months of COBRA continuation coverage, for a maximum of thirty-six (36) months. This extension may be available to the spouse and any dependent children receiving continuation coverage if the Department of Employee Insurance and the Carrier are timely notified of the Qualifying Event. The chart below describes the events that qualify as a second Qualifying Event and the length of the extension permitted.
Second Qualifying Event Length of Extension / Total Coverage Period
Former Employee Dies 18 Months / 36 Months Maximum
Entitlement of Medicare (Parts A or B or Both) 18 Months / 36 Months
18 Months / 36 Months
Dependent Child ceases to be eligible under the Plan 18 Months / 36 Months
COBRA continuation coverage expressly requires that the first event be either termination of a covered employee’s employment or reduction of a covered employee’s hours.
If you have any question
Questions concerning your Plan or your COBRA continuation coverage rights should be addressed to your insurance coordinator or the Department for Employee Insurance identified below. For more information about your rights under COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, you may contact the nearest Regional or District Office of the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) in your area.
Keep your address current
In order to protect you family’s rights, you should keep the Employer (Insurance Coordinator) informed of any address changes for you or your covered dependents. You should also keep a copy of any notices you send to the Plan Administrator for your records.
Plan Contact Information
The Plan Administrator is the Department for Employee Insurance, 200 Fair Oaks Lane, 5th Floor Suite 501, Frankfort, Kentucky 40601, 502-564-6534. If additional information is needed, or you lose group health coverage, contact the above-referenced office for any comments or concerns regarding COBRA rights.
Last Updated 6/30/2008
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