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State & Private Disability FAQs »

COBRA and ERISA Coverage F.A.Q.S.

1. What is “Cobra” Coverage?

COBRA, the Consolidated Omibus Budget Reconsciliation Act, is part of ERISA, the Employee Retirement Security Act, as amended.  This act generally applies to companies with 20 or more employees in a prior year and provides for the continuation of group health coverage in situations where such coverage would be terminated.

2. If I am employed and get health insurance coverage through my employer and it stops, what is continuation coverage?

Federal law requires that most group health plans give employees and their families the opportunity to continue their health care coverage when there is a “qualifying event” that would result in a loss of coverage under an employer’s plan. Depending on the type of qualifying event, “qualified beneficiaries” can include the employee (or retired employee) covered under the group health plan, and the covered employee’s spouse and dependent children.

Continuation coverage is the same coverage that the Plan gives to other participants or beneficiaries under the Plan who are not receiving continuation coverage. Each qualified beneficiary who elects continuation coverage will have the same rights under the Plan as other participants or beneficiaries covered under the Plan, including special enrollment rights.

3. How long will continuation coverage last?

In the case of a loss of coverage due to end of employment or reduction in hours or employment, coverage generally may be continued up to a total of 18 months. In the case of loss of coverage due to an employee’s death, divorce or legal separation, the employee’s Medicare entitlement, or a dependent child ceasing to be a dependent under the terms of the plan, coverage may be continued up to a total of 36 months. When the qualifying event is the end of employment or reduction of the employee’s hours of employment, and the employee became entitled to Medicare benefits less than 18 months before the qualifying even, COBRA continuation coverage for qualified beneficiaries other than the employee lasts until 36 months after the date of Medicare entitlement. This notice shows the maximum period of continuation coverage available to the qualified beneficiaries.

4. When will continuation coverage will be terminated before the end of the maximum period?

  • If any required premium is not paid on time.
  • If a qualified beneficiary becomes covered, after electing continuation coverage, under another group health plan that does not impose any pre-existing condition exclusion for a pre-existing condition exclusion for a pre-existing condition of the qualified beneficiary.
  • If a qualified beneficiary becomes entitled to Medicare benefits (under Part A, Part B, or both) after electing continuation coverage.
  • If the employer ceases to provide any group health plan for its employees, and
  • For any reason the Plan would terminate coverage of a participant or beneficiary not receiving continuation coverage (such as fraud).

5. How can you extend the length of continuation coverage? (If your maximum less than 33 months).

If you elect continuation coverage, an extension of the maximum period of coverage may be available if a qualified beneficiary is disabled or a second qualifying even occurs. You must notify your benefits coordinator of disability or second qualifying event in order to extend the period of continuation coverage. Failure to provide notice of a disability or second qualifying event may affect the right to extend the period of continuation coverage.

6. Will applying or receiving Social Security Disability affect my COBRA coverage?

An 11-month extension of coverage may be available if any of the qualified beneficiaries is determined by the Social Security Administration (SSA) to be disabled. The disability has to have started at some time before the 60th day of COBRA continuation coverage and must last at least until the end of the 18-month period of continuation of coverage. You must make sure that your benefits coordinator is notified of the SSA’s determination (Award letter) within 60 days of the date of determination and before the end of the 18-month period of COBRA continuation coverage n order to extend your coverage. If this notice is not received by your benefits coordinator on time, the extension will not be processed. Each qualified beneficiary who has elected continuation coverage will be entitled to the 11-month disability extension if one of them qualifies. If the qualified beneficiary is determined by the SSA to no longer be disabled, you must notify your benefits coordinator of that fact within 30 days after the SSA’s determination.

7. What is a “Second Qualifying Event”?

An 18-month extension of coverage will be available to spouses and dependent children who elect continuation coverage if a second qualifying event occurs during the first 18 months of continuation coverage. The maximum amount of continuation coverage available when a second qualifying event occurs is 36 months. Such second qualifying events may include the death of a covered employee, divorce or separation from the covered employee, the covered employee’s Medicare entitlement (under Part A, Part B, or both), or a dependent child’s ceasing to be eligible for coverage as a dependent under the Plan. These events can be a second qualifying event only if they would have caused the qualified beneficiary to lose coverage under the Plan if the first qualifying event had not occurred. You must notify your benefits coordinator within 60 days after a second qualifying even occurs if you want to extend your continuation coverage.

8. How can I elect continuation coverage?

To elect continuation coverage, you must complete the election form and furnish it according to the directions on the form. Each qualified beneficiary has a separate right to elect continuation coverage. For example, the employee’s spouse may elect continuation coverage even if the employee does not. Continuation coverage may be elected for only one, several or for all dependent children who are qualified beneficiaries. A parent may elect to continue coverage on behalf of any dependent children. The employee or the employee’s spouse can elect continuation coverage on behalf of all of the qualified beneficiaries.

In considering whether to elect continuation coverage, you would take into account that a failure to continue your group health coverage will affect your future rights under federal law. First, you can lose the right to avoid having pre-existing condition exclusions applied to you by other group health plans if you have more that a 63-day gap in health coverage. Election of continuation coverage may help you not have such a gap. Second, you will lose the guaranteed right to purchase individual health insurance policies that do not impose such pre-existing condition exclusions if you do not get continuation coverage for the maximum time available to you. Finally, you should take into account that you have special enrollment rights under federal law. You have a right to request special enrollment in another group health plan for which you are otherwise eligible (such as a plan sponsored by your spouse’s employer) within 30 days after your group health coverage ends because of the qualifying event previously listed. You will also have the same special enrollment right at the end of continuation coverage if you get continuation coverage for the maximum time available to you.

7. How much does continuation coverage cost?

Generally, each qualified beneficiary may be required to pay the entire cost of continuation coverage. The amount a qualified beneficiary may be required to pay may not exceed 102 percent (or, in the case of an extension of continuation contributions) for coverage of a similarly situated plan participant or beneficiary who is not receiving continuation coverage. The required payment for each continuation period for each option is described on the page titled “Applicable Coverage/Rates.”

The Trade Act of 2002 created a new tax credit for certain individuals who become eligible for trade adjustment assistance and for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC). Under the new tax provisions, eligible individuals can either take a tax credit or get advance payment of 65% of premiums paid for qualified health insurance, including continuation coverage. If you have questions about these new tax provisions, you may call the Health Coverage Tax Credit Customer Contact Center toll-free at 1-866-628-4282. TTD/TTY callers may call toll-fee at 1-866-626-4282. More information about the Trade Act is also available at www.doleta.gov/tradeact/.

8. When and how must payment for COBRA continuation coverage be made?

First payment for continuation coverage. If you elect continuation coverage, you do not have to send any payment with the Election Form. However, you must make your first payment for continuation coverage no later those 45 days after the date of your election (the date the Election Notice is post-marked). Your first payment should cover the cost of continuation coverage from the time your coverage under the Plan would have otherwise terminated up to the time you make your first payment. You are responsible for making sure that the amount of your first payment is correct. You may contact your benefits coordinator to confirm the correct amount of your first payment. If you do not make your first payment for continuation coverage in full no later than 45 days after the date of your election, you will lose all continuation coverage rights under the Plan.

PLEASE NOTE: Continuation coverage will not be reinstated until the completed Election Form(s) AND first payment are received and processed by your benefits coordinator. A returned check fee will be charged for checks returned for non-sufficient funds.

Periodic payments for continuation coverage: After you make your first payment for continuation coverage, you will be required to make periodic payments for each subsequent coverage period. The current amount due for each coverage period for each qualified beneficiary is shown in this notice. The periodic payments are to be made on a monthly basis. Payment is due on the first day of each coverage month. Monthly invoices are normally sent between the 15th – 20th prior to the coverage month. However, you are still responsible for mailing your payment should you not receive an invoice due to postal delays or mishandling. Coverage will normally be terminated if payment is not received timely. Not receiving an invoice will not be accepted as a reason for late- or non-payment. Coverage will not be reinstated.

9. Are there any grace periods for periodic payments?

Although periodic payments are due on the date shown above, you will be given a grace period through the last day of the coverage month to make each periodic payment. Your continuation coverage should be provided for each coverage period as long as payment for that coverage period is made before the end of the grace period for that payment.

If you fail to make a periodic payment before the end of the grace period for that coverage period, you will lose all rights to continuation coverage under the Plan. All payments should be paid to your benefit coordinators, attention COBRA, at the appropriate address.

Please examine your options carefully before declining this coverage. You should be aware that companies selling individual health insurance typically require a review of your medical history that could result in a higher premium or you could be denied coverage entirely.

10. Is there more information available on continuation coverage or other rights I may have?

More information about continuation coverage and your rights under the plan is available in your summary plan description or from the plan administrators. If you have any questions concerning the information in this notice, your rights to coverage, or if you want a copy of your summary plan description, you should contact your benefits coordinator in writing.

For more information about your rights under ERISA, including COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, contact the nearest Regional or District Office of the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) in your area or visit the EBSA website at www.doi.gov/ebsa. Addresses and phone numbers of Regional and District EBSA offices are available through EBSA’s website.

11. Do I need to keep my plan administrator?

Yes. In order to protect your family’s rights, you should keep your benefits coordinator informed of any changes in your address and the addresses of family members. If you elect continuation coverage, you are directly responsible for notifying your benefits coordinator in writing of divorce, legal separation, or a child losing dependent status within 60 days after the qualifying event occurs. Also, when you experience a qualifying event such as birth or adoption of a child, or marriage, you must notify the benefits coordinator in writing within 30 days after the qualifying event occurs. You must send this notice in writing to the benefits coordinator. Failure to do so will result in the spouse/child not being added to the coverage. You should include the name, address, daytime telephone number, Social Security number, and/or Participant ID, explain the type of qualifying event and the qualifying event date. You should also keep a copy, for your records, of any communications you sent to us.

12. Will I receive notice of my right to continue my health care coverage after employment is terminated?

Yes. Your notice contains important information about your right to continue your health care coverage in your employer’s group health plan. You must affirmatively elect COBRA continuation coverage.

If you do not elect COBRA continuation coverage, your coverage under the plan will generally end on the date your employment was terminated. Each person (qualified beneficiary) listed in your notice may be entitled to elect COBRA continuation coverage, which will coverage group health care coverage under the plan for up to 18 months. If elected, COBRA coverage will begin on the date you left your employment and can last until 18 months thereafter.

You normally do not have to send any payment with the election form. However, coverage will not be reinstated until the completed election form and premiums due are received and processed by the office designated in your notice. This process may take 7 -10 days in some cases. Any claim(s) submitted for benefits may be denied and may have to be resubmitted once all premiums due have been paid and your coverage is reinstated. Important additional information about payment for COBRA continuation coverage should be available from your employer or benefits coordinator.

13. What will my election form look like and what will it require of me?

To elect COBRA continuation coverage, an employee will complete an election form and any applicable carrier forms and return it to the employer’s benefits coordinator. Under federal law, you must have 60 days after the date of this notice to decide if you want to elect COBRA continuation coverage under the plan.

Your election form and carrier forms must be completed and returned by mail. It must be postmarked no later than 60 days after your termination of employment. Normally, one makes checks payable to the benefits coordinator and should include the participant’s SSN/Part, ID on the check.

If you do not submit a completed election form by the due date required, you will lose your right to elect COBRA continuation coverage. If you reject COBRA continuation coverage before the due date, you may change your mind as long as you furnish a completed election form before the due date. However, if you change your mind after first rejecting COBRA continuation coverage, your COBRA continuation coverage will begin on the date you furnish the completed election form.

Normally, your election form will appear like the following example:

I (we) elect COBRA continuation coverage in the plan as indicated below:

Qualified Beneficiary Date Of Birth Sex Relationship to Employee SSN/Part ID
Name
a. ____________ ________ ________ _______________ __________
b. ____________ ________ ________ _______________ __________
c. ____________ ________ ________ _______________ __________
d. ____________ ________ ________ _______________ __________

Refer to the “Applicable Coverage/Rates” page to list below the benefits that you wish to elect under COBRA.

Coverage Plan Enrollment Level Monthly Rate
____________________ ______________ ______________ ________________
____________________ ______________ ______________ ________________
____________________ ______________ ______________ ________________

COVERAGE WILL NOT BE REINSTATED UNTIL THE COMPLETED FORM(S) AND INITIAL PAYMENT IS RECEIVED AND PROCESSED BY THE APPROPRIATE OFFICE.
To calculate the amount of your first check:
Month check is mailed:      Months you owe for:      Multiply monthly rate above by: