COBRA Continuation Coverage
What is COBRA Continuation Coverage?
According to CMS, “the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) amended the Public Health Service Act, the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) to require employers with 20 or more employees to provide temporary continuation of group health coverage in certain situations where it would otherwise be terminated.”
Who is Entitled to Continuation Coverage?
According to CMS, “a qualified beneficiary is an individual who is entitled to COBRA continuation coverage because he or she was covered by a group health plan on the day before a “qualifying event.” Depending on the circumstances, the following individuals may be qualified beneficiaries: a “covered employee” (a term that includes active employees, terminated employees and retirees); a covered employee’s spouse and dependent children; any child born to or placed for adoption with a covered employee during the period of COBRA coverage; agents; self-employed individuals; independent contractors and their employees; directors of the employer; and, for public sector group health plans, political appointees and elected officials.”
7 Important COBRA Facts
COBRA is a federal law that may let you keep your employer group health plan coverage for a limited time after your employment ends or you lose coverage as a dependent of the covered employee.
This is called “continuation coverage.”
In general, COBRA only applies to employers with 20 or more employees. However, some states require insurers covering employers with fewer than 20 employees to let you keep your coverage for a limited time.
In most situations that give you COBRA rights (other than a divorce), you should get a notice from your employer’s benefits administrator or the group health plan. The notice will tell you your coverage is ending and offer you the right to elect COBRA continuation coverage.
COBRA coverage generally is offered for 18 months (36 months in some cases). Ask the employer’s benefits administrator or group health plan about your COBRA rights if you find out your coverage has ended and you don’t get a notice, or if you get divorced.
The employer must tell the plan administrator if you qualify for COBRA because the covered employee died, lost their job, or became entitled to Medicare. Once the plan administrator is notified, the plan must let you know you have the right to choose COBRA coverage.
You or the covered employee needs to tell the plan administrator if you qualify for COBRA because you got divorced or legally separated (court-issued separation decree) from the covered employee, or you were a dependent child or dependent adult child who’s no longer a dependent.
You’ll need to tell the plan administrator about your change in situation within 60 days of the change.
Before you elect COBRA, talk with your State Health Insurance Assistance Program (SHIP) about Part B and Medigap.
COBRA coverage is an extremely date sensitive topic. For more information on your clients’ COBRA qualifications and how it affects their Medicare coverage, see the CMS, Medicare, and Department of Labor resources sited below. Or simply call our Agent Support team at 800-689-2800 to go over questions and specific client cases.
General Information on COBRA: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_fact_sheet
COBRA Important Facts: https://www.medicare.gov/supplements-other-insurance/how-medicare-works-with-other-insurance/cobra-7-important-facts
COBRA Q&A: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_qna
An Employee’s Guide to the Health Benefits under COBRA: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf