COBRA

COBRA

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As a client of HollandStivers & Associates, we provide COBRA Administration services to your group for no charge.

Is your company required to comply with COBRA?

 

FEDERAL (COBRA)
KENTUCKY
Covered Employers and Plan Coverage
Group health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments.Coverage must be identical to that available to similarly situated beneficiaries who are not receiving COBRA coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation coverage).
Persons with group health plans which provide hospital or surgical expenses benefits, other than for a specific disease or accidental injury only, have the right to continue coverage for themselves and their dependents upon termination of group membership.
Qualified Beneficiaries (Employee / Dependents)
An employee, spouse or dependent child covered by a group health plan on the day before a qualifying event.In certain cases, a retired employee, the retired employee’s spouse and the retired employee’s dependent children may be qualified beneficiaries.In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is considered a qualified beneficiary.Agents, independent contractors, and directors who participate in the group health plan may also be qualified beneficiaries.
Individual covered by a group health plan for a minimum of three months prior to the qualifying event – either an employee, the employee’s spouse, or an employee’s dependent child.
Continuation Period
18 months – COBRA beneficiaries generally are eligible for group coverage during a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work.29 months – Disability can extend the 18-month period of continuation coverage for a qualifying event that is a termination of employment or reduction of hours. If certain requirements are met, the entire family qualifies for an additional 11 months of COBRA continuation coverage.  Plans can charge 150% of the premium cost for the extended period of coverage.36 months – Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage.36 months – Under COBRA, participants, covered spouses and dependent children may continue their plan coverage when they would otherwise lose coverage due to divorce (or legal separation) for a maximum of 36 months.
18 months – State continuation beneficiaries are generally eligible for group benefits during a maximum of 18 months.
Qualifying Events
Qualifying Events for Employees:
  • Voluntary or involuntary termination of employment for reasons other than gross misconduct (18 months)
  • Reduction in the number of hours of employment (18 months)
Qualifying Events for Spouses:
  • Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct (18 months)
  • Reduction in the hours worked by the covered employee (18 months)
  • Covered employee’s becoming entitled to Medicare  (36 months)
  • Divorce or legal separation of the covered employee (36 months)
  • Death of the covered employee (36 months)
Qualifying Events for Dependent Children:
  • Loss of dependent child status under the plan rules (36 months)
  • Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct (18 months)
  • Reduction in the hours worked by the covered employee (18 months)
  • Covered employee’s becoming entitled to Medicare (36 months)
  • Divorce or legal separation of the covered employee (36 months)
  • Death of the covered employee (36 months)
Qualifying Events for Employees:
  • Termination of group membership (18 months)
Qualifying Events for Spouses:
  • Termination of group membership (18 months)
  • Divorce or legal separation of the covered employee (18 months)
  • Death of the covered employee (18 months)
Qualifying Events for Dependent Children:
  • Loss of dependent child status under the plan rules (36 months)
  • Termination of group membership (18 months)
  • Divorce of legal separation of the covered employee (18 months)
  • Death of the covered employee (18 months)
Eligibility
To be eligible for COBRA coverage, must have been enrolled in employer’s health plan when employed and health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.
To be eligible for continuation coverage, employees must have been covered by the policy for a minimum of three months prior to the coverage loss and must not be eligible for Medicare or other group insurance on the effective date of continuation coverage.
Notice Requirements
Health plan administrators must provide an initial general notice when group health coverage begins.When a qualifying event occurs, health plan administrators must provide an election notice regarding rights to COBRA continuation benefits to each qualifying beneficiary who loses plan coverage in connection with the qualifying event.Employers must notify their plan administrators within 30 days after an employee’s termination or after a reduction in hours that causes an employee to lose health benefits.The plan administrator must provide notice to individual employees of their right to elect COBRA coverage (election notice) within 14 days after the administrator has received notice from the employer.Employee must respond to this notice and elect COBRA coverage by the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later. Otherwise, employee will lose all rights to COBRA benefits.
Spouses and dependent children covered under such health plan have independent rights to elect COBRA coverage upon employee’s termination or reduction in hours.
The insurer must give written notice of continuation rights upon notice of termination from employer.To elect coverage, an employee must submit a written election along with the first premium within 31 days of the receipt of the notice from the insurer.
Termination of Coverage
Coverage begins on the date that coverage would otherwise have been lost by reason of a qualifying event and will end at the end of the maximum period. It may end earlier if:
  • Premiums are not paid on a timely basis.
  • The employer ceases to maintain any group health plan.
  • After the COBRA election, coverage is obtained with another employer group health plan that does not contain any exclusion or limitation with respect to any pre-existing condition of the beneficiary. However, if other group health coverage is obtained prior to the COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.
  • After the COBRA election, a beneficiary becomes entitled to Medicare benefits. However, if Medicare is obtained prior to COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.
Coverage may be terminated prior to the expiration of 18 months if:
  • The employee becomes eligible for Medicare or other health coverage;
  • The employee fails to pay premiums in a timely manner; or
  • The group health plan is terminated and not replaced within 31 days.
Conversion Rights
Some plans allow participants and beneficiaries to convert group health coverage to an individual policy. If this option is generally available from the plan, a qualified beneficiary who pays for COBRA coverage must be given the option of converting to an individual policy at the end of the COBRA continuation coverage period. The option must be given to enroll in a conversion health plan within 180 days before COBRA coverage ends. The premium for a conversion policy may be more expensive than the premium of a group plan, and the conversion policy may provide a lower level of coverage. The conversion option, however, is not available if the beneficiary ends COBRA coverage before reaching the end of the maximum period of COBRA coverage.
Members have the right to convert to a policy offering substantially similar benefits if group coverage is terminated for any reason and without evidence of insurability, provided that:
  • The member is not eligible for Medicare or other group coverage;
  • The member is not eligible for other substantially similar individual coverage;
  • The member would not be over insured;
  • The member had been a member of the group and covered under any health insurance policy offered by the group for at least 3 months; and
  • The member makes a written application to the insurer within 31 days after notification.
Those electing continuation coverage have the right to convert to an individual policy after the continuation period has expired.
Other
In the event that a member is totally disabled when group coverage terminates, the insurer must provide an extension of benefits – anywhere from 90 days to 12 months, depending upon the type of coverage.

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