COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is federal legislation which affects businesses employing 20 or more full and part-time employees on at least 50% of the employer's normal working days during the preceding calendar year. It provides your employees and their dependents with the option to continue their employer-sponsored health coverage which would otherwise terminate under certain circumstances.
Eligibility for a COBRA Continuance is as summarized below:
Qualified Beneficiaries
Qualified beneficiaries for the continuance include the following:
An
employee can elect continuance of employee and dependent coverage for up to 18-months upon
termination of employment (except if the employee has been discharged for gross
misconduct) or upon a reduction in employment hours.
A
dependent spouse can elect continuance of dependent spouse and dependent child coverage
for up to 36 months upon the death of the employee, upon divorce or legal separation or
when the employee becomes eligible for Medicare.
A
dependent child can elect continuance of his or her coverage for up to 36 months upon
ceasing to be an eligible dependent.
Electing the COBRA Option
Qualified beneficiaries have at least 60 days to elect to continue coverage under COBRA. This election period ends 60 days after:
The
date coverage would otherwise have ended, or
60
days after the date the qualified beneficiary receives notice of the right to continue
coverage, whichever is later
The qualified beneficiary must give the employer notice when any of the following occur:
Their
marriage is dissolved
They
become legally separated from their spouse
A
child stops being an eligible dependent under the plan
Within 14 days after receiving this notice, you need to send the Election Form to the qualified beneficiary.
Alternate Coverage's
COBRA continuation is offered in addition to any continuation option (such as a state continuation option) available through your plan as outlined in the Certificate of Insurance. If the alternate coverage does not satisfy all of the COBRA requirements, the qualified beneficiary must be offered the choice between the COBRA continuation coverage and the alternative coverage.
If the individual chooses the alternative coverage, when that alternative coverage ends, the individual does not have to be offered a COBRA election. However, if the dependents of the individual would lose the alternative coverage as the result of a second qualifying event, the dependents must be given an opportunity to elect to continue the alternative coverage with a maximum coverage period of 36 months beginning with the date of the second qualifying event.
