COBRA coverage can be terminated early if premiums are not paid on time, if the employer ceases to maintain any group health plan, if coverage is obtained with another employer’s group health plan, or if the beneficiary becomes entitled to Medicare benefits.
COBRA
COBRA gives employees and their families who lose health benefits the right to choose to continue group health benefits under certain circumstances. COBRA applies to groups with 20 or more employees in the preceding calendar year, but counting employees can be tricky since part-timers count as a fraction of a full-time employee. COBRA has a number of notice requirements along with fines for non-compliance, so some small employers choose to outsource their COBRA administration responsibilities to a Third-Party Administrator (TPA).
How does someone elect COBRA coverage, and what are the deadlines?
To elect COBRA coverage, individuals must complete a COBRA election form and submit it to the plan administrator by the deadline. This deadline is typically 60 days from either the date coverage ended or the date the COBRA election notice was sent, whichever is later.
What are qualifying events for COBRA coverage?
Qualifying events for COBRA coverage generally include voluntary or involuntary job loss (excluding cases of gross misconduct), reduction in the hours worked, transition between jobs, death, divorce, and other life events that lead to loss of eligibility for health coverage.
What does COBRA coverage cost?
Individuals who elect COBRA coverage may be required to pay the full premium for coverage, up to 102% of the cost to the plan. The additional 2% is to cover administrative costs.
How long does COBRA coverage last?
COBRA coverage can last for 18 months following a job loss or reduction in hours. In some cases, such as disability, divorce, or death, coverage can extend up to 36 months. Certain qualifying events may allow for an extension of this coverage period.
Who is eligible for COBRA coverage?
Individuals eligible for COBRA coverage include employees who lose their job (for reasons other than gross misconduct), or have their working hours reduced, as well as their spouses, former spouses, and dependent children when they lose coverage due to the employee’s job loss, death, divorce, or eligibility for Medicare.
What is COBRA and what does it provide for employees?
COBRA is a federal law that provides former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage is only available when coverage is lost due to certain specific events.