When do I have to be offered COBRA coverage?
If you are leaving your job and you had group coverage, you may be able to stay in your group plan for an extended time through COBRA or state continuation coverage. The information presented below was taken from publications prepared by the U.S. Department of Labor. You should contact the department for more information about your rights under COBRA.
- To qualify for COBRA continuation coverage, you must meet 3 criteria:
- First, you must work for an employer with 20 or more employees. If you work for an employer with 2-19 employees, you may qualify for state continuation coverage. (See below.)
- Second, you must be covered under the employer’s group health plan as an employee or as the spouse or dependent child of an employee.
- Finally, you must have a qualifying event that would cause you to lose your group health plan.
COBRA QUALIFYING EVENTS
- Voluntary or involuntary termination of employment for reasons other than gross misconduct
- Reduction in numbers of hours worked
- § Loss of coverage by the employee because of one of the qualifying events listed above
- § Covered employee becomes eligible for Medicare
- § Divorce or legal separation of the covered employee
- § Death of the covered employee
For dependent children
- Loss of coverage because of any of the qualifying events listed for spouses
- Loss of status as a dependent child under the plan rules
- Each person who is eligible for COBRA continuation can make their own decision. If your dependents were covered under your employer plan, they may independently elect COBRA coverage as well.
- To qualify as, you must choose and use up any COBRA or state continuation coverage available to you.
- You must be notified of your COBRA rights when you join the group health plan, and again if you qualify for COBRA coverage. The notice rules are somewhat complicated and you should contact the U.S. Department of Labor for more information.
In general, if the event that qualifies you for COBRA coverage involves the death, termination, reduction in hours worked, or Medicare eligibility of a covered worker, the employer has 30 days to notify the group health plan of this event. However, if the qualifying event involves divorce or legal separation or loss of dependent status, you have 60 days to notify the group health plan. Once it has been notified of the qualifying event, the group health plan has 14 days to send you a notice about how to elect COBRA coverage. Each member of your family eligible for COBRA coverage then has 60 days to make this election.
Once you elect COBRA, coverage will begin retroactive to the qualifying event. You will have to pay premiums dating back to this period.
SPECIAL SECOND CHANCE TO ELECT COBRA FOR TRADE-DISLOCATED WORKERS
- A second COBRA election period may be available for TAA eligible people who did not elect cobra when it was first offered. The second election period can be exercised 60 days from the 1st day of TAA eligibility, but in no case later than 6 months following loss of coverage. Coverage elected during this second election begins retroactive to the beginning of the special election period - not back to qualifying event.
- Certain people who lost their job-based health coverage because of the impact of imports on their employers have a limited second chance to elect COBRA. People who are receiving benefits from the Trade Adjustment Assistance (TAA) Program are eligible for a federal income tax credit (the Health Coverage Tax Credit, or HCTC) that will pay 65% of their premiums.
- For some laid off workers, TAA benefits begin after their 60-day period to elect COBRA continuation coverage has expired. In this circumstance, TAA-eligible people have a second 60-day period, starting on the date of their TAA eligibility, to elect COBRA. (However, in no case can COBRA be elected more than 6-months following the original qualifying event (i.e. layoff) that caused the loss of group health plan coverage.)
- When COBRA is elected during this special, second election period, coverage starts on the first date of the special election period. Any time that has elapsed between the original qualifying event and the first date of the special election period is not counted as a lapse in coverage in determining continuous coverage history.
What will COBRA cover?
- Your covered health benefits under COBRA will be the same as those you had before you qualified for COBRA. For example, if you had coverage for medical, hospitalization, dental, vision, and prescription drug benefits before COBRA, you can continue coverage for all of these benefits under COBRA. If these benefits were covered under more than one plan (for example, a separate health insurance and dental insurance plan) you can choose to continue coverage under any or all of the plans. Life insurance is not covered by COBRA.
If your employer changes the health benefits package after your qualifying event, you must be offered coverage identical to that available to other active employees who are covered under the plan.
What about coverage for my pre-existing condition?
- Because your group coverage is continuing, you will not be faced with a new pre-existing condition exclusion period under COBRA. However, if you were in the middle of a pre-existing condition exclusion period when your qualifying event occurred, you will have to finish it.
What can I be charged for COBRA coverage?
- You must pay the entire premium (employer and employee share, plus a 2% administrative fee) for COBRA continuation coverage. The first premium must be paid within 45 days of electing COBRA coverage.
- If you elect the 11-month disability extension, the premium will increase to 150% of the total cost of coverage. See below for more information about the disability extension.
- If you lost your health insurance and are receiving benefits from the Trade Adjustment Assistance (TAA) Program, you may be eligible for a federal income tax credit to help you pay for new health coverage. This credit is called the Health Coverage Tax Credit (HCTC), and is equal to 65% of the cost of qualified coverage, including COBRA and coverage offered through the Minnesota Comprehensive Health Association.
- If you are a retiree aged 55-65 and receiving benefits from Pension Benefit Guarantee Corporation (PBGC), then you may be eligible for the HCTC.
How long does COBRA coverage last?
- COBRA coverage generally lasts up to 18 months and cannot be renewed. However, dependents are sometimes eligible for up to 36 months of COBRA continuation coverage, depending on their qualifying event. In addition, special rules for disabled individuals may extend the maximum period of coverage to 29 months. To qualify for the disability extension, you must have been disabled at the time of your COBRA qualifying event (such as termination of employment or reduction in hours) or be determined to have become disabled within 60 days of that qualifying event. You must obtain this disability determination from the Social Security Administration, and you must notify your group health plan within 60 days of this disability determination.
LENGTH OF COBRA COVERAGE
Qualifying event(s) — Eligible person(s) – Coverage
Termination — Employee/Spouse/Dependent Child – 18 months *
Reduced hours– Employee/Spouse/Dependent Child – 18 months *
Employee enrolls in Medicare — Spouse/Dependent Child – 36 months
Divorce or legal separation– Spouse/Dependent Child – 36 months
Death of covered employee– Spouse/Dependent Child – 36 months
Loss of dependent child status — Dependent child – 36 months
* Certain disabled persons and their eligible family members can extend coverage an additional 11 months, for a total of up to 29 months.
- Usually, COBRA continuation coverage ends when you join a new health plan. However, if your new plan has a waiting period or a pre-existing condition exclusion period, you can keep whatever COBRA continuation coverage you have left during that period. For specifics, ask your former employer or contact the U.S. Department of Labor.
- COBRA coverage also ends if your employer stops offering health benefits to other employees.
- COBRA coverage might end if you are in a managed care plan that is available only to people living in a limited geographic area and you move out of that area. However, if you are eligible for COBRA and are moving out of your current health plan’s service area, your employer must provide you with the opportunity to switch to a different plan, but only if the employer already offers other plans to its employees. Some examples of the other plans your employer may offer you are a managed care plan whose service area includes the area you are moving to, or another plan that does not have a limited service area.
What about Minnesota continuation coverage?
Minnesota permits certain individuals to continue coverage under their individual health policy and fully insured group health plan (if the employer has 2 or more employees), even after they lose eligibility as a member of that group.
- If you have an individual health insurance policy or your employer offers fully insured health benefits, you may be eligible for continuation coverage under a Minnesota law that is similar to COBRA. In some instances, such as divorce, death and disability, Minnesota law may provide for longer periods of continuation coverage. Ask your former employer or the Minnesota Department of Commerce about state continuation coverage if you think it applies to you.