Plans Subject to COBRA
Almost all employers with group health plans must comply with COBRA, including corporations, partnerships and tax-exempt organizations.
There is a small employer exception to COBRA—an employer’s group health plan is not subject to COBRA if the employer normally employed fewer than 20 employees during the preceding calendar year.
Under COBRA, a qualifying event triggers an obligation to offer COBRA coverage to qualified beneficiaries.
Each qualified beneficiary has an independent right to elect COBRA. For example, if an employee and his or her spouse were covered under the health plan on the day before the qualifying event, the spouse may elect COBRA even if the employee declines coverage.
COBRA Qualifying Events
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires most employers to provide former employees and dependents who lose group health benefits due to a qualifying event with an opportunity to continue group health coverage for a limited period of time.
Most employer-sponsored group health plans are subject to COBRA’s continuation coverage requirements. Under COBRA, an employer must offer continued coverage to a qualified beneficiary when group health coverage ends (or would end) due to a qualifying event. COBRA includes a specific list of seven events that can be considered qualifying events if they result in a loss of group health coverage.
This Compliance Overview provides information about each type of qualifying event, the individuals to whom a coverage offer must be made and how long the continuation coverage must extend.
An employer that is subject to COBRA must offer continuation coverage only when group health plan coverage ends (or would end) due to a qualifying event. COBRA includes the following specific list of seven events that can be considered qualifying events if they result in a loss of group health plan coverage:
- Termination of a covered employee’s employment (other than for gross misconduct)
- A reduction of a covered employee’s hours of employment
- A divorce or legal separation from the covered employee
- The death of a covered employee
- Ceasing to be a dependent child under the terms of the plan
- The covered employee’s entitlement to Medicare
- Employer bankruptcy (for retiree plans)
If an employee or dependent loses group health plan coverage for a reason that is not a COBRAqualifying event, the employer is not required to offer COBRA coverage. Similarly, if the qualifying event does not cause a loss of group health coverage, the employer is not required to offer COBRA coverage.
COBRA coverage must be offered to qualified beneficiaries when:
- A qualifying event occurs when the health plan is subject to COBRA; and
- The qualifying event causes a loss of coverage under the plan for a covered employee, covered spouse or covered dependent child.
Maximum Coverage Period
The period of COBRA coverage offered to qualifying beneficiaries is known as the “maximum coverage period.” The length of the maximum coverage period depends on the type of qualifying event that has occurred. It is:
- 18 months for a termination of employment or reduction in hours; and
- 36 months for all other qualifying events.
There are situations where the maximum coverage period can be extended (due to disability or a second qualifying event) or terminated early (for example, when COBRA premiums are not paid).
A qualifying event is any one of the seven specified events that occurs while a health plan is subject to COBRA and that results in a loss of coverage to a covered employee, covered spouse or a covered dependent child. There are some situations that are not considered qualifying events that require COBRA coverage to be offered.
For example, a cancellation of health plan coverage—whether at the employee’s request or because of the employee’s failure to pay premiums—is not, by itself, a qualifying event that triggers the requirement to offer COBRA coverage. Likewise, cancelling coverage for an ineligible individual who was mistakenly covered by the health plan is not a qualifying event for COBRA purposes.
To lose coverage means to cease to be covered under the same terms and conditions that were in effect immediately before the event. Often, there is a complete loss of coverage due to a qualifying event (for example, a complete loss of health plan coverage following an employee’s termination of employment). However, even a partial loss of coverage can trigger COBRA rights. For example, a loss of coverage includes an increase in employee premiums or contributions as a result of a qualifying event.
COBRA Qualifying Event Notices
Before a group health plan must offer continuation coverage, a qualifying event must occur, and the group health plan must be notified of the qualifying event. Who must give notice of the qualifying event depends on the type of qualifying event.
The employer must notify the plan if the qualifying event is:
• Termination or reduction in hours of employment of the covered employee;
• Death of the covered employee;
• A covered employee becoming entitled to Medicare; or
• Bankruptcy of a private-sector employer.
The employer must notify the plan within 30 days of the event.
You (the covered employee or one of the qualified beneficiaries) must notify the plan if the qualifying event is:
• Legal separation; or
• A child’s loss of dependent status under the plan.
You should understand your plan’s rules for how to provide notice if one of these qualifying events occurs. The plan must have procedures for how to give notice of the qualifying event, and the procedures should be described in both the general notice and the plan’s SPD. The plan can set a time limit for providing this notice, but the time limit cannot be shorter than 60 days, starting from the latest of: (1) the date on which the qualifying event occurs; (2) the date on which you lose (or would lose) coverage under the plan as a result of the qualifying event; or (3) the date on which you are informed, through the furnishing of either the SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so.
If your plan does not have reasonable procedures for how to give notice of a qualifying event, you can give notice by contacting the person or unit that handles your employer’s employee benefits matters. If your plan is a multiemployer plan, notice can also be given to the joint board of trustees, and, if the plan is administered by an insurance company (or the benefits are provided through insurance), notice can be given to the insurance company.
Coordination with Other Federal Benefit Laws
The Family and Medical Leave Act (FMLA) requires an employer to maintain coverage under any “group health plan” for an employee on FMLA leave under the same conditions coverage would have been provided if the employee had continued working. Group health coverage that is provided under the FMLA during a family or medical leave is NOT COBRA continuation coverage, and taking FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer’s obligation to maintain health benefits under FMLA ceases, such as when an employee taking FMLA leave decides not to return to work and notifies an employer of his or her intent not to return to work.
The Affordable Care Act (ACA) provides additional protections for coverage under employment-based group health plans, including COBRA continuation coverage. These include:
• Extending dependent child coverage to age 26;
• Prohibiting limits or exclusions from coverage for preexisting conditions;
• Banning lifetime or annual dollar limits on coverage for essential health benefits; and
• Requiring group health plans and insurers to provide an easy-to-understand summary of a health plan’s benefits and coverage.
Additional protections that may apply to your employer’s plan include coverage for:
• Certain preventive services (such as blood pressure, diabetes and cholesterol tests, regular well-baby and wellchild visits, routine vaccinations and many cancer screenings) without cost sharing, and
• Emergency services in an emergency department of a hospital outside your plan’s network without prior approval from your health plan.
Medicare is the Federal health insurance program for people who are 65 or older and certain younger people withdisabilities or End-Stage Renal Disease. If you are enrolled in Medicare as well as COBRA continuation coverage, there may be special coordination of benefits rules that determine which coverage is the primary payer of benefits. Check your Summary Plan Description to see if special rules apply or ask your plan administrator.
Retirees: Complete this notice and submit it to the UC Retirement Administration Service Center (P.O. Box 24570, Oakland, CA 94623-1570) within the 60-day period mentioned above. Upon receipt of this notice, the WEX Company, UC’s COBRA administrator, will send you a COBRA application packet. You must also submit a Retiree Continuation, Enrollment or Change form (UBEN 100) in order to delete your ineligible family members from your health plans. (The UBEN 100 form is not necessary when a child is reaching age 26 because de-enrollment is automatic.) This form is available on UCnet (ucal.us/UBEN100) or from the UC Retirement Administration Service Center (800-888-8267).
COBRA Qualifying Events in Pandemic
- The COVID-19 pandemic has been declared a national emergency, and many consumers are experiencing changing jobs and job loss.
- If your health care coverage ends because you lose your job, have your hours reduced, or get laid off, you may have rights to certain health benefit protections even if you lose your job.
- If you worked for an employer with 20 employees or more and your company provided a group health plan, you may be entitled to continued health benefits, otherwise known as COBRA.
- You also may have more affordable or more generous options for health coverage available to you and your family through other group health plan coverage, such as through a spouse’s plan, the individual Marketplace, and certain governmental programs.
- COBRA may give you the opportunity to purchase temporary extended health care benefits offered by your former employer while you are looking for a new job or during a waiting period for health benefits imposed by your new employer.
- COBRA provides continuity of coverage, because you stay in exactly the same plan you were in when you were employed, with the same network of doctors and hospitals, and same deductible.
Qualifying Events for COBRA Eligibility For Employee / Former Employee:
- The termination of your employment and loss of benefits (for reasons other than gross misconduct on your part).
- Reduction in your scheduled work hours of employment resulting in loss of benefit eligibility.
- If you are a retiree, your employer has filed for Chapter 11 reorganization.
Note: Since 2000, reduction in hours followed by an increase in employee contribution has also been deemed a qualifying event to allow COBRA coverage to be taken. At the same time retiree coverage under a bankruptcy has been amended to include a substantial elimination of coverage within 12 months before or after the date bankruptcy proceedings began.
For Spouse of Employee / Former Employee:
- The death of your spouse.
- A termination of your spouse’s employment and loss of benefits (for reasons other than gross misconduct), or reduction in your spouse’s scheduled work hours of employment resulting in loss of benefit eligibility.
- Divorce or legal separation from your spouse.
- Your spouse becomes entitled to Medicare benefits (if loss in coverage occurs).
- Your spouse is a retiree and your spouse’s employer files for Chapter 11 reorganization.
For Dependent Child of Employee / Former Employee:
- The death of a parent.
- The termination of a parent’s employment and loss of benefits (for reasons other than gross misconduct) or reduction in a parent’s scheduled work hours of employment resulting in loss of benefit eligibility.
- Parent’s divorce or legal separation.
- A parent becomes entitled to Medicare benefits and would lose group coverage (if loss in coverage occurs).
- The dependent ceases to be a “dependent child” under the group health plan.
- The parent is a retiree and the parent’s employer files for Chapter 11 reorganization.
Note: If, as an employee, you go out on a qualified leave under the Family and Medical Leave Act of 1993, special rules apply. The COBRA Qualifying Event will not start until you notify the company, during the leave period, that you will not be coming back or if you do not return at the end of the leave period.
Under the law, the employee or a family member has the responsibility to inform the Benefits Department of your employer (or former employer) of a divorce, legal separation, or a child losing dependent status under the group health plan within 60 days of this Qualifying Event. There is also a 60-day notification requirement for informing the Plan Administrator of a disability award from the Social Security Administration to qualify for the possible disability extension.
INFORMATION REGARDING COBRA ELIGIBILITY DUE TO A QUALIFYING EVENT
Consolidated Omnibus Reconciliation Act of 1985 (COBRA)
Under federal COBRA law, the State of Indiana is required to offer covered employees and eligible dependents the opportunity to continuation of health coverage at group rates when coverage is lost due to certain specific events. The information provided below is a shortened version of the actual notice provided at the time
that a qualified event is experienced and should be used only as a reference tool. The loss of health insurance resulting from a qualified event allows all covered individuals the right to buy back group health insurance and continue the coverage for a period of time under provisions of COBRA. Covered participant’s COBRA rights and obligations are detailed in this notification.
Each individual who was covered under the plan on the day before the event is a “qualified beneficiary” and has independent election rights to continuation coverage. This means each dependent that was covered can elect independently to continue coverage, even if the covered employee chooses not to continue coverage. However, continuation coverage is available to qualified beneficiaries subject to their continued eligibility. After the employer is notified that a qualifying event has occurred, the covered individuals (also known as qualified beneficiaries) will be notified of their rights to elect continuation coverage. Each qualified beneficiary
has independent COBRA election rights and will have 60 days to elect continuation coverage. The 60 day election window is measured from the later of the date health plan coverage is lost due to the event or from the date of COBRA notification. This is the maximum period allowed to elect COBRA, as the plan does not provide an extension of the election period beyond what is required by law. If a qualified beneficiary does not elect continuation coverage within this election period, then rights to continue health insurance will end and they cease to be a qualified beneficiary You may not be covered under the plan during the election period. However, if a COBRA election is made and applicable premiums paid, then your health insurance plan will be reactivated back to your loss of coverage date and pending claims will be released for payment.
If you elect to continue your health insurance, a qualified beneficiary is responsible for the full applicable premium payment for the coverage selected, plus a 2% administration charge. The applicable premium includes both the employer and employee’s share of the total premium. Under the provisions of COBRA, each qualified beneficiary can elect to continue all the coverages or any single coverage or any combination of the coverages. The applicable premiums will vary depending on the coverage elected. If you are covered by a region specific HMO and are moving outside of the HMO service area, additional rights may be available to you at the time of the event.
If the event causing the loss of coverage is a termination of employment or a reduction in work hours, then each qualified beneficiary may continue coverage for up to 18 months from the date of the qualifying event. If the original event causing the loss of coverage was the death of the employee, divorce, legal separation,
Medicare entitlement, or a dependent child ceasing to be a dependent, then each qualified beneficiary will have the opportunity to continue coverage for up to 36 months from the date of the qualifying event. You will receive a Certificate of Health Insurance Portability which details the amount of time covered under
the group health insurance plan.
Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the time covered under the group health plan (including COBRA coverage, if elected) may be used to reduce a new health plan’s pre- existing condition period. For example, if you were covered under our health plan for 10 months, including COBRA coverage, and your new health plan has a 12 month pre-existing condition clause for new enrollees, the new plan would subtract 10 months from the 12 month pre-existing condition period, which would leave you with only a two month pre-existing condition period. However, for your coverage under our plan to be counted under a new health plan, there must not be a break in coverage for more than 63 days from the time our plan (including COBRA coverage, if elected) ceases, to the date of enrollment in your new health plan. Questions regarding a new health plan’s pre-existing condition period and the impact HIPAA will have, should be directed to your new health plan. If you obtain other health insurance, present the Certificate of Health Insurance Portability to your new health insurance plan and they will determine if any benefits are available to you in this matter.
Length of COBRA Coverage 18 Months
If the event causing the loss of coverage is a voluntary or involuntary termination of employment (other than for reasons of gross misconduct) or a reduction in hours (which causes loss of coverage), then each qualified beneficiary will have the opportunity to continue coverage for 18 months from the date of loss of coverage.
Extensions to the 18-Month COBRA Coverage Period
Social Security Disability – The 18 months of continuation coverage can be extended for an additional 11 months of coverage, to a maximum of 29 months, for all qualified beneficiaries if the Social Security Administration determines a qualified beneficiary was disabled according to Title II or XVI of the Social Security Act at any time during the first 60 days of continuation coverage. It is the qualified beneficiary’s responsibility to obtain this disability determination from the Social Security Administration and provide a copy of the determination to the plan within 60 days after the date of determination and before the original 18 months expire. It is also the qualified beneficiaries responsibility to notify the plan within 30 days if a final determination has been made that they are no longer disabled.
Secondary Events – Another extension to the 18-month continuation period can occur, if during the 18 months of continuation coverage, a second event takes place (divorce, termination of domestic partnership, legal separation, death, or a dependent child ceases to be a dependent (e.g., child turns age 26). If a second event occurs, then the original 18 months of continuation coverage can be extended to 36 months from the date of loss of coverage for eligible dependent qualified beneficiaries (for a spouse, domestic partner, or dependent child).
If a second event occurs, it is the qualified beneficiary’s responsibility to notify the plan in writing within 60 days of the second event and within the original 18-month COBRA timeline.
A reduction in hours followed by a voluntary or involuntary termination of employment is not considered a second COBRA event. In no event, however, will continuation coverage last beyond three years (36 months) from the original date of loss of coverage.
Special Medicare Entitlement Rule for Dependents Only
If an employee becomes entitled to Medicare benefits prior to the date of an 18-month qualifying event, then his/her dependents is eligible for 18 months of COBRA continuation coverage, or 36 months measured from the date of the Medicare entitlement, whichever is greater.
Example: If an employee becomes entitled to Medicare seven (7) months prior to termination of employment, then the dependents will be offered 29 months of continuation coverage. The employee is only offered 18 months.
Length of COBRA Coverage 36 Months
If the event causing the loss of coverage is the death of the employee, divorce, termination of domestic partnership, legal separation, Medicare entitlement, or a child ceases to be a dependent (e.g., child turns age 26), then each qualified beneficiary will have the opportunity to continue coverage for 36 months from the date of loss of coverage.
If COBRA is elected, the total cost for the insurance will be 100% of the total premium, plus a 2% administration fee. The premium is paid monthly by the enrollee to the plan or its designee. The plan or its designee is not required to send a monthly bill. Your department is not required to pay a share of the COBRA premium. If there is a change in future premium rates, then you will be notified prior to the new premiums going into effect.
Open Enrollment Period
If you elect COBRA, you will have rights to make allowable changes to your coverage during the annual open enrollment period. Specific instructions will be sent to you prior to the beginning of the open enrollment period.
COBRA in Retirement
If a former spouse, domestic partner, or dependent child of a retired State employee has a COBRA qualifying event, he/she will be offered continuation coverage through CalPERS. CalPERS retirees and their eligible dependents should contact CalPERS regarding COBRA notices and enrollment options.
Questions – If any covered individual has questions regarding this notice of your COBRA rights and responsibilities or you want to report a change in address, please contact the Personnel Office at (phone number, address, and name of department representative) for assistance. It is important to keep us informed of a change in address.