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COBRA | General Information

The Consolidated Omnibus Budget Reconciliation Act of 1985 requires most employers to offer continuation coverage to Qualified Beneficiaries who lose coverage as a result of a Qualifying Event. This was passed in order to provide employees, their spouses and dependents, with a temporary extension of group health insurance when coverage is lost due to a Qualifying Event. COBRA coverage must be identical to the coverage provided to similarly situated active employees.

Any Employer with 20 or more Employees during 50% of business days the previous calendar year is subject to Federal COBRA Law. Individual State laws may vary.

A Covered Employee is any individual who is currently provided coverage under the Employer’s Group Health Plan.

A Group Health Plan is a plan that provides medical care and is maintained by the employer. The benefits include medical, dental, vision, and prescription drug treatments and coverage. Plans subject to COBRA also include HMOs, group insurance plan premiums paid by the employees, treatment programs and clinics maintained by Employers (except first aid care supplied free of charge to employees during working hours), self-insured medical reimbursement plans, employee assistance programs, health flexible spending arrangements (Health FSA) offered under a cafeteria plan, discount programs, and wellness programs.

Any individual covered under the Employer’s Group Health Plan the day before a COBRA Qualifying Event is considered a Qualified Beneficiary.. A Qualified Beneficiary is a covered spouse of the covered employee, a covered dependent child of the covered employee or any child born to or placed for adoption with the employee during a period of COBRA coverage. A retired employee who is covered under the plan the day before the bankruptcy is a Qualified Beneficiary as is the covered spouse and dependent children. The Qualified Beneficiary has the same rights as the covered employee under the Plan. A child receiving benefits pursuant to a Qualified Medical Child Support Order is a qualified beneficiary.

A child born or adopted after a qualifying event that led to COBRA coverage is a qualifying event for the child making the child a qualified beneficiary.

A person who marries, is born to, or placed for adoption with a Qualified Beneficiary other than the Employee is not a qualified beneficiary and not entitled to COBRA coverage.

There are qualifying events that trigger 18-month COBRA coverage and 36 month COBRA coverage. The Qualifying Event must cause a loss of coverage or change in the level of coverage provided.

18-Month Qualifying Events

  • Voluntary Termination (failure to return from FMLA)
  • Involuntary Termination, except for Gross Conduct
  • Reduction of Hours (Strike, Layoff, Leave of Absence, Full to part-time employment)
  • Early Retirement

36-Month Qualifying Events

  • Death of the Employee
  • Employee’s Medicare Entitlement - The Employee’s entitlement to Medicare Part A is NOT a Qualifying Event. If the Employee experiences a Qualifying Event after Medicare Part A entitlement he can also elect COBRA. If the Medicare Part A entitlement occurs after the COBRA election, COBRA can be terminated.
  • Divorce or Legal Separation - The Employee or other qualified Beneficiary must notify the Employer/TPA/PSP within 60 days from the latter of
    1. The Date of the Event or
    2. The date on which the Qualified Beneficiary would lose coverage on account of the event.

    If the employee dropped the spouse from the group health plan in anticipation of the divorce, coverage is effective on the date of the divorce or legal separation.

    Only expenses incurred prior to the qualifying event can be applied to the individual's deductible, i.e. only the spouse’s incurred expenses can be applied to the spouse’s deductible.

  • Dependent Child ceasing to be a Dependent under the Plan - The Employee or other qualified Beneficiary must notify the Employer/TPA/PSP within 60 days from the latter of
    1. The Date of the Event or
    2. The date on which the Qualified Beneficiary would lose coverage on account of the event.