COBRA is a Federal law that allows certain individuals (qualified beneficiaries) to continue their health insurance benefits for a limited period of time when their employment is terminated. This law only applies to individuals who are employed by a company with 20 or more employees. Self employed, independent contractors and non-employee directors of a company cannot be included in the employee count to determine if your employer has twenty or more employees. Part-time employees count as a fraction of an employee. If five part-time employees work a total of forty hours, they equal one for the purposes of an employer counting the number of employees for COBRA eligibility. A qualified beneficiary refers to individuals who are covered under the employer’s group health plan the day before a COBRA qualifying event takes place. The qualified beneficiary is the covered employee, covered spouse of the employee, covered dependent children, or any child born to, or placed for adoption, with the covered employee during the period of COBRA continuation.

A qualifying event happens when you resign from your employment, or if you are terminated from your employment (except for gross misconduct) or if you have a reduction of hours.

If you qualify for COBRA benefits, your employer must make available to you the same benefits that you and your co-workers had the day before your termination or reduction in hours (the qualifying event). If the employer changes the group health insurance benefits package while you are receiving COBRA benefits you, too, will change to the new plan offered to the rest of the actively employed employees. Your employer must notify you within 14 days from your termination (qualifying event) that you are eligible for benefits. You will be responsible for paying the premium and the employer can charge you an additional 2 percent to cover his administrative costs.

The employee and his dependents can continue their benefits for 18 months. This 18 month period can be extended if you are totally disabled. If the employee dies, becomes divorced or legally separated, the spouse and dependent children can continue the group benefits for 36 months. When a dependent child ceases to be a dependent, the child can continue benefits under the COBRA law for 36 months.

Your employer is responsible for knowing when you lose your job, or have a reduction of hours, or if you die, or are entitled to Medicare. It is the employers’ responsibility to notify you or your spouse covered under the plan of their COBRA rights. This notice must be sent out within 14 days. However, if you become divorced or legally separated or your child ceases to be a dependent, it is your responsibility to notify your employer of this qualifying event. The employee or other qualified beneficiary (spouse or a dependent child that is no longer dependent) must inform the employer or Plan Administrator within 60 days from the date of the event (divorced, separation, or dependent child ceasing to be a dependent) that they wish to continue on the group plan.

You may find additional information about the COBRA law in your Employee Benefits Booklet describing your health insurance plan or your Employee Benefits Department may have additional information for you.

  
Irene Card & Betsy Chandler share the responsibilities of running Medical Insurance Claims, Inc. a health insurance services company. If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, browse our past columns on our web site at  www.micinsurance.com.   

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