Understand COBRA

Under certain circumstances, you can have extend COBRA insurance coverage and it’s crucial that you take advantage of this if you qualify. In order to qualify for additional months of COBRA coverage, the beneficiary must have a ruling by the Social Security Administration that the beneficiary became disabled within the first 60 days of COBRA continuation coverage. Then the beneficiary must send the plan a copy of the SSA ruling letter within 60 days of receipt but prior to the expiration of the 18 month period (of original COBRA coverage). If they do both then the entire family qualifies for an additional 11 months of COBRA coverage, though the insurance plan can charge 150% of the original premium cost for that extended period.

If you decided to waive COBRA coverage during the initial election period and then change your mind, you can do so as long as you revoke the waiver of coverage before the end of the election period. If the election period has passed then unfortunately you cannot revoke your waiver. After you revoke the waiver, simply elect COBRA coverage but the plan only needs to provide continuation coverage beginning the date of the waiver.

For example, if you elected to revoke your waiver of COBRA coverage on January 15th because you suffered an event on the 14th, your COBRA plan may not cover you for that event on the 14th because they are only obligated to cover you after the date of your waiver.

The main thing to remember is that when you sign up for COBRA health insurance, you are actually just being allowed to continue coverage under your former (or current if you lost coverage because of hours) employer’s health insurance program and so you are entitled to the same rights and benefits as a full time non-COBRA insurance covered employee. So, what happens if you have a child while you’re on COBRA? Usually that, and getting married or any other event where a dependent is added, is considered a qualifying event on most health insurance plans and you’re allowed add that dependent to your insurance coverage. If that is the case with the main plan then you will be allowed to add that dependent onto your COBRA coverage since it will be identical to the other plan, it’s just that you pay the full bill (instead of being subsidized as a benefit by your employer). You will have to contact your plan administrator for the paperwork.

So in summary, if you need to add a dependent to your COBRA coverage and the dependent came by way of a qualifying event such as a birth, marriage, etc. you will usually be allowed to add that dependent to your COBRA health insurance, just contact your plan administrator. If you just want to add a child that wasn’t covered before, that will likely not be possible since you had the option to add them when you enrolled - again, check with your plan administrator but usually health insurance plans won’t let you add dependents without a qualifying event such as birth or marriage.

COBRA insurance is often very very expensive because you’re getting your existing coverage, which is likely not going to be cheap, without the subsidies provided by your (potentially former) company. So, before you opt into COBRA, which is the easiest thing to do, you should consider researching how much short term medical insurance would actually be for someone with your medical characteristics.

Now, if your current medical condition is not ideal (perhaps because you have pre-existing conditions), COBRA may be your best option. However, if you are in excellent health, it pays to consider alternatives because they can be far cheaper because they may be catering to consumers on a budget. Since you do have quite a bit of time before you elect COBRA, it pays to just send out a lot of requests and see what the ballpark is for insuring you.

eHealthInsurance is one of many reputable medical insurance quoting sites and they offer both Individual & Family Health Insurance and Short-Term Health Insurance. When my fiancée left her job, this was the first site she visited to research her health insurance options.

Good luck!

CONTENTS
———————————————

INTRODUCTION

WHAT IS THE CONTINUATION HEALTH LAW?

WHO IS ENTITLED TO BENEFITS?

Plan Coverage

Beneficiary Coverage

Qualifying Events

Chart: Periods of Coverage

YOUR RIGHTS: NOTICE AND ELECTION PROCEDURES

HOW COBRA COVERAGE WORKS

COVERED BENEFITS

DURATION OF COVERAGE

PAYING FOR COBRA COVERAGE

CLAIMS PROCEDURES

ROLE OF THE FEDERAL GOVERNMENT

CONCLUSION

INTRODUCTION

Health insurance programs allow workers and their families to take care of essential medical needs. These programs can be one of the most important benefits provided by your employer.


There was a time when group health coverage was available only to full-time workers and their families. That changed in 1986 with the passage of health benefit provisions in the Consolidated Omnibus Budget
Reconciliation Act (COBRA). Now, terminated employees or those who lose coverage because of reduced work hours may be able to buy group coverage for themselves and their families for limited periods of time.


If you are entitled to COBRA benefits, your health plan must give you a notice stating your right to choose to continue benefits provided by the plan. You have 60 days to accept coverage or lose all rights to benefits. Once COBRA coverage is chosen, you are required to pay for the coverage.


This page is designed to:

WHAT IS THE CONTINUATION HEALTH LAW?


Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) [1] health benefit provisions in 1986. 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.


COBRA contains provisions giving certain former employees, retirees, spouses and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available in specific instances. Group health coverage for COBRA participants is usually more expensive than health coverage for active
employees, since usually the employer formerly paid a part of the premium. It is ordinarily less expensive, though, than individual health coverage.


The law generally covers group health plans maintained by employers with 20 or more employees in the prior year. It applies to plans in the private sector and those sponsored by state and local governments. [2] The law does not, however, apply to plans sponsored by the Federal government and certain church- related organizations.


Group health plans sponsored by private sector employers generally are welfare benefit plans governed by ERISA and subject to its requirements for reporting and disclosure, fiduciary standards and enforcement. ERISA neither establishes minimum standards or benefit eligibility for welfare plans nor mandates the type or level of benefits
offered to plan participants. It does, though, require that these plans have rules outlining how workers become entitled to benefits.


Under COBRA, a group health plan ordinarily is defined as a plan that provides medical benefits for the employer’s own employees and their dependents through insurance or otherwise (such as a trust, health maintenance organization, self-funded pay-as-you-go basis, reimbursement or combination of these). Medical benefits provided under the terms of the plan and available to COBRA beneficiaries may include:

WHO IS ENTITLED TO BENEFITS?


There are three elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, beneficiaries and events which initiate the coverage.


PLAN COVERAGE


Group health plans for employers with 20 or more employees on more than 50 percent of the working days in the previous calendar year are subject to COBRA. The term “employees” includes all full-time and part-time employees, as well as self-employed individuals. For this purpose, the term employees also includes agents, independent contractors and directors, but only if they are eligible to participate in a group health plan.


BENEFICIARY COVERAGE


A qualified beneficiary generally is any individual covered by a group health plan on the day before a qualifying event. A qualified beneficiary may be an employee, the employee’s spouse and dependent children, and in certain cases, a retired employee, the retired employee’s spouse and dependent children.


QUALIFYING EVENTS


“Qualifying events” are certain types of events that would cause, except for COBRA continuation coverage, an individual to lose health coverage. The type of qualifying event will determine who the qualified beneficiaries are and the required amount of time that a plan must offer the health coverage to them under COBRA. A plan, at its discretion, may provide longer periods of continuation coverage.


The types of qualifying events for employees are:

PERIODS OF COVERAGE [3]

Special rules for disabled individuals may extend the maximum periods of coverage. If a qualified beneficiary is determined under Title II or XVI of the Social Security Act to have been disabled at the time of a termination of employment or reduction in hours of employment and the qualified beneficiary properly notifies the plan administrator of the disability determination, the 18-month period is expanded to 29 months.


Although COBRA specifies certain maximum required periods of time that continued health coverage must be offered to qualified beneficiaries, COBRA does not prohibit plans from offering continuation health coverage that goes beyond the COBRA periods.


Some plans allow beneficiaries to convert group health coverage to an individual policy. If this option is available from the plan under COBRA, it must be offered to you. In this case, the option must be given for the beneficiary to enroll in a conversion health plan within 180 days before COBRA coverage ends. The premium is generally not at a
group rate. The conversion option, however, is not available if the beneficiary ends COBRA coverage before reaching the maximum period of entitlement.


PAYING FOR COBRA COVERAGE


Beneficiaries may be required to pay the entire premium for coverage. It cannot exceed 102 percent of the cost to the plan for similarly situated individuals who have not incurred a qualifying event. Premiums reflect the total cost of group health coverage, including both the portion paid by employees and any portion paid by the employer before the qualifying event, plus two percent for administrative costs.


For disabled beneficiaries receiving an additional 11 months of coverage after the initial 18 months, the premium for those additional months may be increased to 150 percent of the plan’s total cost of coverage.


Premiums due may be increased if the costs to the plan increase but generally must be fixed in advance of each 12-month premium cycle. The plan must allow you to elect to pay premiums on a monthly basis if you ask to do so.


The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the qualifying event. Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30-day grace period for payments.


The due date may not be prior to the first day of the period of coverage. For example, the due date for the month of January could not be prior to January 1 and coverage for January could not be canceled if payment is made by January 31.


Premiums for the rest of the COBRA period must be made within 30 days after the due date for each such premium or such longer period as provided by the plan. The plan, however, is not obligated to send monthly premium notices.


COBRA beneficiaries remain subject to the rules of the plan and therefore must satisfy all costs related to deductibles, catastrophic and other benefit limits.


CLAIMS PROCEDURES

Contact the plan administrator for more information on filing a claim for benefits. Complete plan rules are available from employers or benefits offices. There can be charges up to 25 cents a page for copies of plan rules.


COORDINATION WITH OTHER BENEFITS


The Family and Medical Leave Act (FMLA), effective August 5, 1993, requires an employer to maintain coverage under any “group health plan” for an employee on FMLA leave under the same conditions converge would have been provided if the employee had continued working. Coverage provided under the FMLA is not COBRA coverage, and FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer’s obligation to maintain health benefits under FMLA ceases, such as when an employee notifies an employer of his or her intent not to return to work.


Further information on FMLA is available from the nearest office of the Wage and Hour Division, listed in most telephone directories under U.S. Government, Department of Labor, Employment Standards Administration.


ROLE OF THE FEDERAL GOVERNMENT


Continuation coverage laws are administered by several agencies. The Departments of Labor and the Treasury have jurisdiction over private sector health plans. The United States Public Health Service administers the continuation coverage law as it affects public sector health plans.


The Labor Department’s interpretative and regulatory responsibility is limited to the disclosure and notification requirements. If you need further information on your election or notification rights with a private sector plan, write to the nearest office of the Pension and Welfare Benefits Administration (See Field Directory at end of document)
or:


U.S. Department of Labor

Pension and Welfare Benefits Administration

Division of Technical Assistance and Inquiries

200 Constitution Ave., N.W.

(Room N-5619)

Washington, D.C. 20210



The Internal Revenue Service, which is in the Department of the Treasury, is responsible for publishing regulations on COBRA provisions relating to eligibility and premiums. Both Labor and Treasury share jurisdiction for enforcement.


The U.S. Public Health Service, located in the Department of Health and Human Services, has published Title XXII of the Public Health Service Act entitled “Requirements for Certain Group Health Plans for Certain State and Local Employees.” Information about COBRA provisions concerning public sector employees is available from the:


U.S. Public Health Service Office of the Assistant Secretary for Health Grants Policy Branch (COBRA) 5600 Fishers Lane (Room 17A-45) Rockville, Maryland 20857


Federal employees are covered by a law similar to COBRA. Those employees should contact the personnel office serving their agency for more information on temporary extensions of health benefits.


CONCLUSION


Rising medical costs have transformed health benefits from a privilege to a household necessity for most Americans. COBRA creates an opportunity for persons to retain this important benefit.


Workers need to be aware of changes in health care laws to preserve their benefit rights. A good starting point is reading your plan booklet. Most of the specific rules on COBRA benefits can be found there or with the person who manages your health benefits plan.


Be sure to periodically contact the health plan to find out about any changes in the type or level of benefits offered by the plan.


Written and Produced by PWBA’s Division of Public Affairs, 1994

Unfortunately, the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) is a mandate that requires employers to offer health coverage to employees after they leave however universities are not considered employers in that relationship with students. What this means is that universities are not required to and often do not extend health insurance coverage to students after graduation. Some universities offer coverage on a yearly basis which may, as a matter of coincidence, extend past the date of graduation. Ultimately, I recommend that you contact your university’s health services or medical department for further clarification and assistance.

This, however, is entirely different if you are an employee, and recognized as such, of a university. In that particular case you would be eligible for COBRA health insurance because you were an employee. Whether your status as an employee or as a student takes precedence is up to your university, so again you will have to contact them for clarification.

When you become eligible for COBRA insurance, your employer is required to send you a notice informing you of your options. Not only are they required to send you notice, they’re required to send this notice to you through the mail and can’t just give it to you - that doesn’t count as notice. However, what happens if the package gets lost in the mail (possible)? What if they only say they’ve mailed it but haven’t actually mail it (not very likely)? What recourse do you have?

Well, according to this explanation, if your (former) company has a system in place for these notices and can show that they’ve sent one out, even if it never reached you, then they are probably off the hook.

If they can’t show that they have a system in place or some sort of proof they mailed it out, then they are in violation and while I’m not sure what that means for you, you can get some sort of resolution since they’ve violated the law.

Gross misconduct is not considered a qualifying event and thus if you are dismissed and lose your health benefits because of gross misconduct, you are not eligible for health coverage under COBRA (your employer is not required by law to extend health benefits to you). However, the COBRA legislation doesn’t specify what is considered gross misconduct and neither have court decisions. That being said, it will take a lot for an employer to dismiss someone for gross misconduct because they know that the former employee will likely challenge the dismissal in court, a process no company really enjoys going through.

Normally, if you fail to pay the premiums on a COBRA, your employer can terminate your health insurance coverage. The exception to this rule is commonly known as the “short payment rule” and that is when your payment is less than the full premiums but above a special limit. How short your payment can be is the lesser of $50 or 10% of your monthly health insurance premiums. Let take a look at some examples…

Example 1: Jack normally pays $400 per month for COBRA health insurance coverage but this month he’s a little short. If Jack pays $361, which puts him $39 short (less than 10%, which is $40), his employer may not terminate health insurance coverage. If Jack pays $359, which puts him $41 short, his employer can terminate his coverage.

Example 2: Steve normally pays $600 per month for COBRA health insurance coverage, but this month he can only pay $549, which is $51 short, so his employer can terminate his insurance. The 10% rule does not apply because 10% of $600 ($60) is more than $50, so they use $50 as the short payment amount.

With a short payment, the employer can:

1. Accept it as full payment.
2. Accept payment but notify the insured that they are short and give them 30 days to make up the difference.

Why would a company accept it as full payment when it’s clearly not? Because sometimes it costs more to go after someone for the payment than it does just to let it go.

At some point, your COBRA insurance will expire and your employer will no longer be required to carry you on their health insurance plan. At that point, you will have to being searching for a health insurance carrier and I have a few suggestions as to how to go about doing that.

Research whether any of the professional organizations you are a member of can offer any sort of health insurance benefits. While this is rare, I have heard of organizations offering health insurance and it could be a great way to security health benefits. If you can’t get it through any sort of organizations or associations, you may have to go it alone.

Going it alone is difficult, but there are some online tools available to help you in your search. Kanetix is an online insurance comparison shopping engine that will be able to help you compare your health insurance options (and auto, homeowners, etc). Through Kanetix, NetQuote will be able to give you a quote for insurance with a major medical plan (MMP), preferred provider organizations (PPO), and point of service (POS) insurers; as well as coverage for dental coverage, maternity coverage, prescription benefit, and vision care benefit.