By Peter M. Langdon
October 22, 2019 Every day people change and lose jobs or have life events, such as divorce or a child turning age 26. The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) protects workers and their families when these events occur. COBRA provides continuing employer group health plan coverage for a period of time after these events. Both employers and employees should remember their rights and obligations under COBRA.
Generally, COBRA applies to employers that employ at least twenty (20) employees on more than fifty percent (50%) of its business days in the previous calendar year. COBRA obligations are triggered only when an employee, spouse, or group health plan beneficiary has a qualifying event. A qualifying event includes any of the following:
- termination of employment (other than for gross misconduct),
- reduction in hours,
- an employee becomes entitled to Medicare,
- divorce or legal separation,
- employee death, and
- loss of dependent child status.
If an individual suffers a qualifying event, then the employee or his or her family is eligible for COBRA if they comply with its requirements. An employer must comply with the following requirements:
- the employee’s COBRA rights must be included in the group health plan’s Summary Plan Description,
- the employee and spouse must receive a general notice describing their COBRA rights within the first ninety (90) days of coverage,
- upon the occurrence of a qualifying event, the employer, the employee, or the beneficiary must notify the health plan of the qualifying event within thirty (30) days after the occurrence,
- after a qualifying event is reported, the health plan must issue an election notice to the affected individual within fourteen (14) days, outlining the substantive benefits to which the employee, spouse, or beneficiary is entitled, and
- the health plan must provide the employee, spouse, or health plan beneficiary at least sixty (60) days to decide whether or not to elect continuation coverage.
The continuation coverage must be the same as the coverage other individuals receive who are not on COBRA continuation coverage. Continuation coverage lasts either 18 or 36 months, depending on the qualifying event. The individual will pay for continuation coverage. The employer can charge a 2% administrative fee. The total charged to the employee cannot exceed 102% of the premiums other individuals pay who are not on COBRA continuation coverage.
Group health plan coverage is essential for an individual’s health and for employers to attract and retain talent. If you have questions about COBRA you can contact Harvey Cooper or Peter Langdon at 402-392-1250 or by email at [email protected] or [email protected].