COBRA Insurance Coverage
The Consolidated Omnibus Budget Reconciliation Act of 1985—commonly known as “COBRA”—mandates continuation of group health insurance coverage for certain individuals under certain circumstances. Compliance with COBRA requirements is limited to employers who employ twenty (20) or more employees.
COBRA coverage is mandated when “qualifying events” occur. These “qualifying events” vary between employees, on the one hand, and spouses or dependent children of the employee, on the other, but include voluntary or involuntary job loss, a reduction in work hours (for reasons other than gross misconduct), job transition, death, divorce or other life events. Covered employees do not include employees receiving Medicare. Disqualification from COBRA eligibility may occur if an employee acquires Medicare coverage, or is determined to have committed “gross misconduct” associated with work. However, employees who are terminated for bad performance, inefficiency or reduction in force may continue insurance plan coverage by electing, and paying for, coverage following receipt of notification of COBRA rights.
Notification of COBRA Rights and Coverage Election
The law generally requires that employers or plan administrators notify all covered employees of their right to continued COBRA coverage within specified time periods after a “qualifying event.” After receiving such notification, the individual has at least sixty (60) days to elect to continue coverage. Additionally, employees and dependents whose insurance is protected under COBRA must be provided with any conversion privilege otherwise available in the plan. Employers who fail to provide COBRA notice or comply with its notice requirements may be subject to civil penalties.
When an individual qualifies for COBRA, this does not mean that the employer must pay for the coverage. Instead, the covered employee may be required to pay the entire premium for coverage. Nonetheless, plans may choose to offer continuation coverage at reduced or no cost. Generally, the maximum amount that a plan can charge to covered individuals cannot exceed 102% of the cost to the plan for similarly situated individuals covered under the plan who have not experienced a qualifying event.
COBRA also sets forth standards for the continuation coverage that employers or plans must provide, requirements for how long the coverage must be provided, and how such coverage may be terminated early. Depending on the “qualifying event” and individual at issue, the duration of COBRA may vary from 18 months to 36 months. COBRA contains many other requirements and caveats not described herein that are important to know and understand, especially in relation to the terms and requirements of other federal laws, like the Family and Medical Leave Act and the Affordable Care Act. As a result, it is imperative to retain legal counsel to make sure COBRA notice, election and coverage are handled appropriately in all material respects.
Contact Us
To set up a consultation about COBRA, please contact Dolley Law, LLC at (314) 645-4100 or by email at kevin@dolleylaw.com. All legal consultations are held strictly confidential.