COBRA

In 1986, Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions.  The law amends the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise would be terminated.

Are you eligible for COBRA?
In general, three groups of people (known as qualified beneficiaries or QB’s) are eligible for COBRA coverage: employees or former employees in private business, their spouses and their dependent child(ren). One of several types of “qualifying events” must occur in order to trigger COBRA, as outlined in the chart below. You are then eligible to buy COBRA for the maximum coverage period as determined by your beneficiary status and the qualifying event.NOTE: You are not required to stay on COBRA for the entire allowable coverage period, nor will you always be able to if different coverage comes along.

 

Qualifying Event Beneficiary(ies) eligible for COBRA (known as QB’s) Maximum coverage time 1,2,3
  • Termination of job
  • Reduced hours
Employee, Spouse, Dependent child(ren)

18 months

  • Employee entitled to Medicare
  • Divorce or legal separation
  • Death of employee
Spouse, Dependent child(ren)

36 months

  • Loss of dependent child status
Dependent child(ren)

36 months

 

Your COBRA coverage ends when:

  • You reach the last day of (maximum) coverage.
  • Premiums are not paid on a timely basis.
  • The former employer ceases to maintain any group health plan.
  • You obtain coverage through another employer group health plan that does not contain any exclusion or limitation with respect to any pre-existing condition of a beneficiary.
  • A beneficiary is entitled to Medicare benefits.
  • You move out of the service area of the benefit plan.
  • You commit fraud or deception in the use of plan services.

When would you want to continue your group health plan benefits under COBRA?

You would most likely continue your health benefits under COBRA if you…

  • have had recent health problems.
  • have ongoing health problems.
  • are taking expensive medications.
  • have recently been declined for private insurance.
  • have a history of medical problems.
  • had an accident within the 60 day window of enrollment.
  • are pregnant or planning to get that way soon.
  • want continued, guaranteed coverage with the same benefits.
  • got a new job and your new employer does not offer a health plan.

Electing COBRA Coverage

You, your spouse and your child(ren) have 60 days to elect COBRA coverage. This election period is counted from the date your eligibility notification is sent to you or the date that you lost your health coverage (whichever is later). If you elect COBRA, your coverage will be retroactive to the date that you lost your benefits.  You then have an additional 45 days to pay all premiums due to date.

Paying for COBRA

You will be responsible for paying the full amount, plus an administrative fee of up to 2%, as allowed by COBRA law.  You must pay your premiums monthly and in a timely manner.

Timely Manner means…

You will be responsible for paying your premiums by the first of the month for which they are due.  Your “grace period” will be be the same as your former employer’s grace period (normally 30 days).  If you are canceled for non-payment of premium, you WILL NOT be reinstated, and coverage will cease on the last day of the month for which premiums were paid.

1   Recent Cal-COBRA legislation extended the length of coverage for QB’s who are terminated from their group plan on or after January 1, 2003.  Please contact your HR Department for details.

2   Cal-COBRA legislation may allow additional time for a QB aged 60 (or more) with 5 years of service at VRC.  Please contact your HR Department for details.

3   COBRA may allow an additional 11 months for totally disabled (Social Security definition) QB’s.  Please contact your HR Department for details.

This is a SUMMARY ONLY of COBRA. Please refer to your Evidence of Coverage and COBRA notifications for complete details.  You may also click on the link below to visit the government website on COBRA.

http://www.dol.gov/ebsa/newsroom/fscobra.html