What Coverage Do You Get Under COBRA

The employer must provide health coverage at least at the same unsubsidized premium offered to all other employees on the group plan plus 2% for administrative costs. Thus, if the employer normally subsidizes premiums for its employees, it is not required to subsidize premiums for former employees on COBRA. Although this may result in a shock for the beneficiary who was used to paying a fraction of the cost, the amount would likely be much lower than premiums charged on an individual health plan. The employer can end COBRA for the former employee early if it ends group health coverage for employees altogether. 29 U.S.C. 1162(2)(B). The employer can also cut COBRA short if the beneficiary joins another group health plan (unless it excludes or limits pre-existing conditions), if the beneficiary becomes qualified for Medicare after the COBRA election (but, if the beneficiary joined Medicare within 18 months prior to the qualifying event, COBRA coverage must be extended to 36 months), or neglects to pay premiums on time (within 30 days of the date due). Also, employers can end COBRA early if the beneficiary once qualified for a COBRA extension from 18 to 29 months due to qualifying for Social Security disability but later receives a “final determination” from the SSA that there is no disability. But, this provision is unlikely to be invoked since final determinations generally take longer than 29 months.

COBRA AND YOUR HEALTHCARE

Employers must provide COBRA coverage for those who lost their job or had a reduction in hours for a period of 18 months. 29 U.S.C. ll62(2)(A)(i). If you are found disabled by Social Security within 60 days of a termination (or other qualifying event defined in 29 U.S.C. 1163), COBRA is extended to 29 months If the plan administrator is notified within 60 days of the Social Security award decision and before the initial 18 month coverage elapses.

WHAT IF THE EMPLOYER GOES BANKRUPT OR THE EMPLOYEE’S SPOUSE OR DEPENDENTS LOSE THEIR HEALTH COVERAGE?

Normally, if the employer ends group health coverage for all employees, it is not required to continue COBRA for former employees. But, if the employee loses health coverage because the employer goes bankrupt, the employee can still qualify for COBRA coverage for life. 29 U.S.C. 1163(6), 1162(2)(A)(iii). Spouses and dependents can receive COBRA benefits for 36 months upon the death of or divorce from the covered employee. 29 U.S.C. 1163(2)(A)(iv). If a dependent child becomes no longer a dependent, the covered period is also 36 months.

EMPLOYER OBLIGATION

The employer must notify the plan administrator within 30 days of a qualifying event, e.g., a termination, etc. The plan administrator must then notify the former employee within 14 days of notification by the employer.

The plan administrator must allow the former employee 60 days to elect to continue health coverage under COBRA and another 45 days after making the election to pay the first premium.

The covered employee or beneficiary can elect COBRA coverage anytime within the first 60 day period, even if she first waives coverage during this period.

Coverage is effective on the date of the qualifying event, e.g., termination. If the employer does not subsidize COBRA premiums, the employee may qualify for a reduction in premium to 35% of the group plan rate if the qualifying event is an involuntary job loss between approved dates.