COBRA INSURANCE - WHAT IS IT?

BE SMART-UNDERSTAND THE LAW

By: Stuart H. Grozbean

You are now divorced and not covered under your former spouses health insurance or your job has terminated. COBRA is a federal law which requires a person covered under a health insurance policy be given the right to continue that coverage, at their own cost, for a set time period if you qualify. COBRA coverage requires that you have the same health insurance policy, although your coverage would now be individual and not family. You have to pay the employer's cost for that individual policy. The coverage is generally limited to 18 months as a transition period. Federal law does not cover all people, only group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA.

In a nut shell the qualifying event to allow COBRA benefits is set forth below.

Qualifying Events for Employees:

• Voluntary or involuntary termination of employment for reasons other than gross misconduct
• Reduction in the number of hours of employment

Qualifying Events for Spouses:

• Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
• Reduction in the hours worked by the covered employee
• Covered employee's becoming entitled to Medicare
• Divorce or legal separation of the covered employee
• Death of the covered employee

Qualifying Events for Dependent Children:

• Loss of dependent child status under the plan rules
• Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
• Reduction in the hours worked by the covered employee
• Covered employee's becoming entitled to Medicare
• Divorce or legal separation of the covered employee
• Death of the covered employee

Employers must notify plan administrators of a qualifying event within 30 days after an employee's death, termination, reduced hours of employment or entitlement to Medicare.

A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child's ceasing to be covered as a dependent under plan rules.

Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice that a qualifying event has occurred. The individual then has 60 days to decide whether to elect COBRA continuation coverage. The person has 45 days after electing coverage to pay the initial premium.


How long after a qualifying event do I have to elect COBRA coverage?

Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage. Each qualified beneficiary may independently elect COBRA coverage. A covered employee or the covered employee's spouse may elect COBRA coverage on behalf of all other qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child. Qualified beneficiaries must be given at least 60 days for the election. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator. The election notice must be provided in person or by first class mail within 14 days after the plan administrator receives notice that a qualifying event has occurred.

The information contained in this article is general in nature.

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