What is COBRA continuation health coverage?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions amend the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to require group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated.
Eligible Reasons to Elect COBRA
The following are qualifying events for a covered employee if they cause the covered employee to lose coverage:
- Termination of the employee’s employment for any reason other than “gross misconduct”; or
- Reduction in the number of hours of employment.
The following are qualifying events for the spouse and dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:
- 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 becomes entitled to Medicare;
- Divorce or legal separation of the spouse from the covered employee; or
- Death of the covered employee.
In addition to the above, the following is a qualifying event for a dependent child of a covered employee if it causes the child to lose coverage:
- Loss of “dependent child” status under the plan rules. Under the Affordable Care Act, plans that offer coverage to children on their parents’ plan must make the coverage available until the adult child reaches the age of 26.
DePauw University must depend on notice from the employee when certain events occur that would qualify the employee or dependent for COBRA. Under COBRA regulations, the employee or family member is responsible for informing the University of such events, including: divorce, legal separation, or a child losing dependent status (e.g., due to marriage). Such notice must be within 31 days of the later of the following dates: date of the event, or date on which coverage would end under the plan because of the event. When DePauw determines that an employee or dependent has experienced an event that qualifies the enrollee for continuation coverage, DPU provides a written notice of COBRA rights and an application for the employee and dependents. The employee and/or dependents have 60 days from the date that coverage would end or date of offer letter, whichever comes later, to elect COBRA.
Length of Coverage
The length of COBRA coverage is between 18 and 36 months, depending on the circumstances:
- 18 months when coverage is lost due to termination or reduction in hours;
- 29 months when coverage is lost and individual becomes disabled within 60 days of termination;
- 36 months when coverage is lost due to death, divorce, legal separation, or loss of dependent child status.
Benefits under Continuation Coverage
If you elect continuation coverage, the coverage you are given must be identical to the coverage that is currently available under the plan to similarly situated active employees and their families (generally, this is the same coverage that you had immediately before the qualifying event). You will also be entitled, while receiving continuation coverage, to the same benefits, choices, and services that a similarly situated participant or beneficiary is currently receiving under the plan, such as the right during an open enrollment season to choose among available coverage options. You will also be subject to the same rules and limits that would apply to a similarly situated participant or beneficiary, such as co-payment requirements, deductibles, and coverage limits. The plan’s rules for filing benefit claims and appealing any claims denials also apply.
Any changes made to the plan’s terms that apply to similarly situated active employees and their families will also apply to qualified beneficiaries receiving COBRA continuation coverage. If a child is born to or adopted by a covered employee during a period of continuation coverage, the child is automatically considered to be a qualified beneficiary receiving continuation coverage. You should consult your plan for the rules that apply for adding your child to continuation coverage under those circumstances.
Electing COBRA Coverage
Each qualified beneficiary has a separate right to elect continuation coverage. A parent may elect to continue coverage on behalf of any dependent children. The employee or employee's spouse can elect continuation coverage on behalf of all of the qualified beneficiaries. If you elect COBRA coverage and have a newborn child placed with you for adoption, then that child will be considered a dependent for COBRA purposes.
In considering whether to elect continuation coverage, you should take into account other group health plan coverage options for you and your family (such as a spouse’s plan) through what is called a “special enrollment period.” Because of a qualifying event listed, you have the right to request special enrollment in another group health plan for which you are otherwise eligible within 31 days after your group health coverage ends. You may also consider other health plan coverage options through the Health Insurance Marketplace or Medicaid. Some of these options may cost less than COBRA continuation coverage. You can learn more about many of these options at www.healthcare.gov.
Reasons Why Coverage May End
A group health plan may terminate coverage earlier than the end of the maximum period for any of the following reasons:
- Premiums are not paid in full on a timely basis;
- The employer ceases to maintain any group health plan;
- A qualified beneficiary begins coverage under another group health plan after electing continuation coverage;
- A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage; or
- A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage (such as fraud).