I always have to stop and think what this acronym stands for because it is a mouthful – “Consolidated Omnibus Budget Reconciliation Act”. By now, most of us are probably very familiar with the COBRA Act of 1985 because of recent layoffs and downsizing in your company. Because of COBRA, employees are entitled to continue participating in the company’s group health plan for a prescribed period of time, usually 18 months. What are the qualifying events that trigger COBRA continuation of coverage?
- Termination of employment
- Reduced work hours
- Death
- Divorce
- Separation
The law applies to employees and their covered dependents and they can continue their health insurance by paying full cost of group coverage plus an administrative charge, typically 2%. In certain circumstances, such as an employee’s divorce or death, the length of coverage period may be longer for qualified dependents. COBRA is not extended to employees who are terminated for gross misconduct.
There are certain notices required by COBRA. Below are some of the notices along with timeframes:
• COBRA rights notices. Employees and their spouses who become covered under group health plans must be given general notices describing their COBRA rights within the first 90 days of coverage.
• Employer notices of qualifying events. Employers must notify plan administrators within 30 days after qualifying events occur, such as covered employees’ termination or reduction in hours of employment, employees’ death, or covered employees’ entitlement to Medicare.
• COBRA election rights notices. Qualified beneficiaries must receive COBRA election notices describing their right to continuation coverage and how to make elections. These notices must be provided within 14 days after plan administrators receive notice of qualifying events, or within 44 days in the case of self-administered plans.
