The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their families the right to choose to continue their health care benefits for a limited time if their health care coverage is lost due to a qualifying event. These qualifying events include but are not limited to voluntary or involuntary job loss, reduction in the hours worked, a covered spouse’s divorce or legal separation from the employee, or a covered dependent’s change in status. Employers need to be sure that they are in compliance with COBRA regulations so they can avoid fines and penalties.
Who needs to provide COBRA coverage? Generally, private employers who offer a group health plan and have had at least 20 or more full-time equivalent employees on more than 50% of its typical business days in the previous calendar year are subject to COBRA.
Most states and Washington, D.C. have enacted mini-COBRA laws. Pennsylvania and the neighboring states of New Jersey, Delaware, Maryland, and Virginia have such laws. Generally, the mini-COBRA is for employers who have between 1 and 19 employees. Be sure to check the guidelines for each state. The length of time and type of qualifying event varies. Mini-COBRA in PA provides coverage for a maximum of 9 months rather than 18.
Who qualifies for COBRA? Anyone, including spouses and dependents, who had coverage under the employer’s health care plan and was covered the day before the event that caused the loss of coverage needs to be offered COBRA. COBRA coverage does not have to be offered to an employee who was not yet eligible to participate in the group health plan, an employee who declined participation in the group health plan, or an employee who is enrolled for Medicare benefits.
Which benefits are covered? Any plan that an employer establishes or maintains which provides medical care, such as:
Health care plans
Medical spending accounts
Dental and vision plans
Prescription and drug plans
Alcohol and substance abuse plans
Mental health plans
COBRA Notices and Election Procedures:
There are specific notices and disclosures regarding COBRA that must be provided to covered individuals and qualified beneficiaries explaining their rights.
Summary Plan Description: This written document provides plan information, including what benefits are available under the plan. ERISA requires that group health plans need to provide participants a summary plan description within 90 days of becoming a plan participant.
COBRA General Notice: Group health plans are required to give each employee (and spouse, if applicable) a general notice detailing their COBRA rights within the first 90 days of coverage.
COBRA Qualifying Event Notice: The plan is not required to act until notice of a qualifying event is provided. The type of qualifying event will determine who sends the notice. Employers must notify the plan if the qualifying event is one of the following:
Termination or reduction in hours
Death of covered employee
A covered employee is entitled to Medicare
Notification must occur within 30 days of the event.
COBRA Election Notice: When the plan receives notice of a qualifying event, qualified beneficiaries must be given an election notice within 14 days. This describes their rights and how they can elect to continue coverage.
A company’s responsibilities under COBRA can be complicated and this blog is not a comprehensive listing of all the situations an organization may encounter. If you have any questions or concerns regarding your responsibilities under COBRA, please contact us.