When an employee leaves employment, regardless if the separation is voluntary or involuntary, one of the first items to address is the letter outlining your benefits under C.O.B.RA. Although carrying the same name as the world’s largest venomous snake, there is nothing to worry about if you know your rights under C.O.B.R.A.
The Consolidated Omnibus Budget Reconciliation Act (C.O.B.R.A.), the federal law passed in 1985 and effective April 7, 1986, gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. C.O.B.R.A. applies to employers with 20 or more employees on more than 50% of the employer’s typical business days during the previous calendar year.
C.O.B.R.A. Notification and Election Period
The employer is required to notify the employee of their rights to continue coverage within 14 days after the plan administrator receives notice of the qualifying event. There are several important points that each C.O.B.R.A. letter must address, but the most important are:
- The start date of the election period
- The end date of the election period
- The amount of the premium
The election period is the time when the employee can decide whether to participate or not to participate in C.O.B.R.A. The start date of the election period is typically the last day of employer sponsored health insurance coverage for an employee. The end date of the election period can be any date that the employer designates but must be at least 60 days from the date the election notice is provided.
Because the employer has the responsibility to meet specific notification dates, communications to the employee will typically be sent with proof of delivery or the employer will require the employee to attest to receipt of the C.O.B.R.A. offer notice. If proof of delivery is not provided it is suggested that the employee confirm either by email or letter that the C.O.B.R.A. notification was received. Written confirmation from the employee can be used to establish the start of the election period.
Qualified individuals may be required to pay the entire premium for coverage in addition to a 2% administration fee that can be collected by the employer. The C.O.B.R.A. notification letter will clearly indicate the costs of the coverage, where to make the premium payment and the grace period for late premium payments. Benefits under C.O.B.R.A. must duplicate the benefits available to active employees and their families. A qualified beneficiary must be offered the same benefits, choices, and services that an active employee currently receives under the plan, including the right during the plan’s open enrollment period to select coverage from among available options. Ancillary coverage such as dental and vision are available under C.O.B.R.A. if the qualified individual was covered by those benefits when they were an active employee.
Life insurance and disability insurance is not considered ‘medical care,’ and would not be available under C.O.B.R.A. Also, C.O.B.R.A. does not apply to plans that provide only life insurance or disability benefits.”
Do Not Accept Nor Decline C.O.B.R.A.
Employers will many times rush an employee to make a decision regarding C.O.B.R.A. coverage, but the employee does not have to decide and can take the entire election period to decide. The reason the delay is to the employee’s advantage is because insurance under C.O.B.R.A. is available and can be activated at anytime during the election period. C.O.B.R.A. is the only time you can elect insurance and pay the premium when it is needed, as compared to paying a monthly premium and never using the coverage.
An analogy if the same C.O.B.R.A. rules applied to car insurance would be if you wrecked your car and decided at that time you needed car insurance, paid the premium and filed a claim. In the case of no car wreck, you did not need to pay the premium, but you had access to the coverage just in case. The C.O.B.R.A. premium only needs to be paid if health insurance benefits are needed, but you will be required to pay premium back to start of the election period.
Obviously, if a claim is far less than the C.O.B.R.A. premium if would not make economic sense to pay the premium. If the claim exceeds the C.O.B.R.A. premium or if the benefits are needed, then it makes sense to pay the premium.
If you waive C.O.B.R.A. coverage during the election period, you must be permitted to later revoke your waiver of coverage and elect coverage, as long as you do so before the election period ends. In such cases, the plan may make C.O.B.R.A. coverage effective on the date you revoked the waiver.
Qualifying Event for Special Enrollment Period
When an individual loses coverage due to loss of employment a Special Enrollment Period is created, which will allow enrollment in an ACA plan from the individual market, even though C.O.B.R.A. is available. This is important because not only is coverage available, but a subsidy that can reduce monthly premium cost may be available. The requirement to take advantage of alternative coverage to C.O.B.R.A. is to apply within the 60-day Special Enrollment Period (SEP following loss of employer sponsored group coverage. You also have the option to drop coverage, either as a former employee, spouse or dependent during the annual Open Enrollment period between November 1 and December 15 with a January 1 effective date.
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
Stateside can be contacted either by phone (866) 444-3332 (toll free) or by email at firstname.lastname@example.org. Our Telephone Appointment System can be accessed through:
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