COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law enacted to provide benefits to employees who have been recently terminated. Since it can sometimes take a few weeks (or even months) to find new employment, COBRA requires that employers continue to provide health coverage to ex-employees for a specific amount of time following termination. Whether you are an employer or an employee, here is what you need to know about COBRA continuation health coverage.
Who is eligible to receive COBRA benefits?
COBRA is provided to employees who are terminated or who quit for reasons that don’t include “gross misconduct”. It can also apply to employees who experience a decrease in the hours worked, thus making them ineligible for company-supplied benefits.
Are spouses and dependents covered by COBRA?
Spouses and dependents (such as children) are covered by COBRA as long as they were members of the employee’s health care plan before the termination. For example, if an employee is laid off from his job, he cannot then add his spouse to the plan so that she is covered by COBRA continuation health coverage.
How do you activate COBRA coverage?
When an employer fires an employee, he or she must notify the health plan administrator within thirty days of termination or a reduction in hours. Once that has happened, the ex-employee will receive notification of their COBRA benefits by mail, and he or she has forty-five days to pay the initial premium that will activate COBRA coverage.
What if you are denied COBRA coverage?
If, for any reason, you are denied COBRA benefits, you usually have about sixty days to file an appeal. Most health plans have ninety days to formally inform you of the denial, so the process can be lengthy. Make sure that you file an appeal with the appropriate documentation included. Once you have filed the appeal, a decision will be made within two months.
How long does COBRA provide continuation health coverage?
The current length for COBRA coverage is eighteen months, though it can extend as long as thirty-six months depending on the circumstances. For example, employees who are disabled on the job will often receive longer COBRA coverage.
Can employees receive an extension of COBRA benefits?
If you feel that you are entitled to an extension of COBRA coverage (such as a disability), you can file for an extension. It must be validated by the Social Security Administration and must be received before the initial period of COBRA coverage expires.
What benefits are included in COBRA coverage?
In 99% of cases, the COBRA continuation coverage will be identical to that which was given before the employee was terminated. In other words, your health plan shouldn’t change at all from before you had to activate COBRA coverage.
How much does COBRA coverage cost?
Since you are no longer part of your former employer’s health plan, you will be responsible for paying the premium on your COBRA coverage. You will still qualify for group rates, however, which are significantly lower than individual rates, though you may be subject to a nominal administration fee.