COBRA

It’s time for a refresher on the COBRA law. Contrary to popular belief, COBRA is not an insurance policy. COBRA is a law that allows you to continue your health insurance benefits under certain circumstances. COBRA stands for Consolidated Omnibus Budget Reconciliation Act, and was originally passed in 1986.

First, COBRA is a federal law – which obviously means it pertains to all states, not just New Jersey. Secondly, it pertains to companies who employ more than 20 employees. If you work for a company with fewer than 20 employees, this law does not apply to you. Simply stated, COBRA requires employers to offer the same group medical coverage to employees and their dependents who lose their group coverage for a variety of reasons. If your employer employs 20 or more employees, he is required to make continued insurance coverage available if you quit your job, are fired, or if your hours are reduced to the point that you would not be eligible for the health insurance benefits. If you lose your job because of gross misconduct, you are not eligible for COBRA benefits.

There must be a ‘qualifying event’ before you can continue your benefits. A qualifying event would be the date of your employment termination, or the date your hours are drastically reduced, or the date of a divorce, or the death of an employee, or the date when dependent children cease to be dependent on your group plan.

If you lose your job or your hours are dramatically reduced, you (and any of your dependents that are already on the plan) can continue your benefits under the COBRA law for 18 months. The spouse and the dependent children of an employee can also continue their benefits for 36 months if they become divorced or legally separated from the employee, the employee dies, or the employee becomes eligible for Medicare. Dependent children that cease to be dependent (technically) can continue for 36 months.

You must pay your former employer your portion of the group’s premium. The employer can charge you an additional two percent of the actual rate. Continued coverage under COBRA must be offered to you regardless of any health conditions. The advantage of continuing your benefits under COBRA is that it takes some pressure off of you allowing you to hopefully find a new job or another insurance plan. The benefits that are offered to you (and/or your dependents) must be the same as that offered to your former co-workers. If you are presently continuing your insurance benefits under the COBRA law, and your employer changes group plans, your plan will also change. You must have the same benefits that your former co-workers have.

Your benefits under the COBRA law can end if the employer no longer provides group health insurance to any of its employees, if you have not paid your premium, or if you become covered under another group health plan. Also, if you become eligible for Medicare, your benefits will end under the COBRA law.

It is the responsibility of the employee or family member to inform the group health administrator of any change in family status. Your employer is responsible for notifying you of your right to continue your benefits under the COBRA law and you have 60 days from the date you would lose coverage to make a decision about continuing your benefits under COBRA. Because the COBRA law is very complicated and very important, many employers hire companies to administer the paperwork related to benefits under COBRA. CobraServe is one such company and COBRA Compliance Systems is another company. If your employer utilizes the services of an outside company, you will receive notification from that company and you will make your premium payments payable to that company. I urge you not to be late with paying your premiums if you have benefits under the COBRA law. The contract can be canceled immediately if they do not receive the premium in a timely fashion.

The Pension and Welfare Benefits Administration of the United States Department of Labor enforces COBRA. The first step to resolving a COBRA complaint is to try to work it out with the employer. If that fails, contact the local office of the United States Department of Labor. For readers of this column, the nearest office is the New York Regional Office located in Manhattan. Their phone number is (212) 399-5199.

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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