COBRA and Your Group Health Insurance
The Consolidated Omnibus Budget Reconciliation Act, or COBRA, is part of America’s healthcare reform policy. This act provides protection for employees who become ineligible for employee sponsored group health plans. If you are off work for FMLA, worker’s compensation, or lose your job for any reason, you have continued access to healthcare through COBRA.
Under federal law, all businesses employing 20 or more persons must offer COBRA health insurance coverage when applicable. However, California has more stringent laws affecting COBRA coverage.
California COBRA Coverage
While many healthcare reform changes have been made at the federal level, California legislators felt their citizens needed more. They passed California’s Cal-COBRA law, which provides greater protection for employees who work for small businesses. This law extends COBRA coverage to businesses with 2-20 employees, in addition to the federally regulated larger businesses. To review the differences between federal COBRA laws and California’s Cal-COBRA law, visit http://www.cobrahealth.com/CAL-COBRA.html for a detailed comparison chart.
COBRA Coverage and Your Group Health Insurance
If you are an employee who is looking at losing your group health insurance, it is useful to understand how COBRA coverage works and what your rights are under this act. Conversely, if you are a small business in California providing group health insurance to your employees, you need to understand COBRA coverage to ensure compliance with federal and California laws regarding healthcare. Here are a few COBRA coverage tips to help you sort through the COBRA confusion.
COBRA Coverage and Your Group Health Insurance Tip #1: Providing Notice
Under federal law, employers must provide eligible employees with a COBRA "first COBRA notice", immediately after a qualifying event occurs. This notice must be sent out to the employee and all qualified dependants. This notice is contains basic information about COBRA coverage and the employee’s rights under the law.
An employer has up to 90 days to send out this first COBRA notice. The countdown begins from the first day the employee’s health coverage ended. The notice may be delivered in person or via mail, but some employers choose to send all first COBRA notices via certified mail to provide for legal coverage in the event of a lawsuit. This created a paper trail that can be used as evidence in a lawsuit and provides proof of the date of receipt of the first COBRA notice.
COBRA Coverage and Your Group Health Insurance Tip #2: Inform Your Employees Of Their Responsibilities
According to COBRA, employees are responsible for notifying the group health plan company when a qualifying event occurs. Such an event includes any changes that would make the employee ineligible for continued employer sponsored healthcare coverage. This could include a reduction in hours to part time status, failure to pay monthly premiums, or an extended leave of absence from work.
Also, the employer is responsible to ensure that employees understand their responsibilities under the COBRA act. This information is often provided to the employee when they initially opt into the company’s group health insurance plan. Employers are also responsible for notifying an employee’s dependants, including his or her spouse, of COBRA requirements and rights in the event of the death of an employee who is enrolled in the company’s group health plan. The dependants are then responsible for notifying the group health plan administrator of the death of the employee.
COBRA Coverage and Your Group Health Insurance Tip #3: The Second Notice
Within fourteen days of a qualifying event that makes an employee eligible for health insurance, the employer must send out a second COBRA notice. In addition, the plan administrator must send out a notice within 44 days of the event.
While the time frame for the third COBRA notice is extended, it is generally a good idea to send out this notice as soon as possible to avoid problems or delays in COBRA coverage.
COBRA Coverage and Your Group Health Insurance Tip #4: Employee Responsibilities for Certain Qualifying Events
In order to understand COBRA coverage and adhere to the qualifications, it is important to understand qualifying events. Some common qualifying events that require an employee to notify the plan administrator of changes are:
- becoming legally separated
- divorce
- dropping to part time status when the employer does not offer health insurance coverage to part time employee
- children reach the age of 18
It is important to understand that some children over the age of 18 are still eligible for coverage under a parent’s group health plan. Please check with your individual policy for the coverage details.
COBRA Coverage and Your Group Health Insurance Tip #5: Keep in touch with your plan administrator
If you are not the plan administrator for your group health plan, it is important to stay in touch with them to learn about any new requirements or regulations. New regulations are passed every year and you will need to stay on top of them to ensure that your company is completely up-to-date.
COBRA coverage is intended to protect worker’s rights to health insurance. These requirements ensure that working families and individuals have access to health care, even in dire circumstances.