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COBRA

Let Us Handle Your COBRA Administration!

Contact us today for more information on how we can assist you with ongoing new hire and qualifying event notifications.

Not sure if you are required to offer COBRA? Reach out today for more info!

cobra@paitpa.com

(800) 615-2797 ext 15

Who has to Comply?

Every employer (except "church groups") who maintains a group health insurance plan, and who employs 20 or more full- and/or part-time employees during 50 percent of the business days in the preceding calendar year or as further defined under the 2001 Final COBRA Regulations.

Notification of Rights

1. The employer or the plan administrator must notify every employee and every covered spouse of all of their rights under COBRA within 90 days of when they first become covered under the group health plan. Separate notices must be sent if separate residences are maintained. This applies to all current and future employees and covered spouses.

2. Each time a Qualifying Event occurs, the employer must, within 14 days of notification to the Plan Administrator, notify each Qualified Beneficiary of his/her continuation rights, benefits and premium rates for the plan(s) in which they're eligible. For either kind of notification, good faith compliance has been defined as First-Class Mail, addressed to both the employee and spouse and sent to the last known home address. If covered dependents live at a separate address, separate notifications must be sent.

Election Rights

When a Qualifying Event causes loss of coverage, the employer must allow continued coverage under the group health plan for up to 18 months in the case of termination of employment or reduction in hours, or up to 36 months for a dependent Qualifying Event. A second Qualifying Event that causes a loss of coverage under the group health plan for a dependent occurring during the 18-month coverage period of the first Qualifying Event expands the original period to 36 months.

What is a Qualifying Event?

Any of the following events causing a loss of coverage by a Qualified Beneficiary under the plan:

1. Termination (other than for gross misconduct) of the employee's employment, for any reason (layoff, resignation, retirement, etc.)

2. Reduction of hours worked by

Employee

3. Death of the employee

4. Divorce or legal separation

5. Dependent child ceasing to meet eligibility requirements

6. Dependent coverage is lost because the active employee (or COBRA continuant) becomes entitled to Medicare.

7. Retiree or retiree's spouse or child loses coverage within one year before or after the commencement of proceedings under Title 11 (bankruptcy), United States Code of the sponsoring employer.

Who is a Qualified Beneficiary?

Any employee, spouse or dependent child who was covered on the day before the

Qualifying Event and who would otherwise lose coverage under the plan because of the Qualifying Event. This definition also includes a child born to or placed for adoption with a covered employee during the period of COBRA coverage.

 

Election Timeframe

Qualified Beneficiaries are allowed to buy continuation coverage retroactive to the benefit termination date. They are entitled to make this election within 60 days of the date of the notification of their rights or the date that benefits would terminate, whichever is later. If they decline, they may change their minds and elect— if they are still within the 60-day election period.

 

Choices of Coverage

Each Qualified Beneficiary must be allowed to make an independent election. For example, if the plan contains medical and dental coverage, the employee may decline coverage, the spouse may elect medical only, and the child may elect medical and dental.

 

Dependents

You must allow 'branching" of coverage. If a continuant elects family coverage, his or her dependent(s) are allowed to continue benefits if/when they would otherwise cease to be eligible under the contract as dependents during the 18- 36-month continuation period.

Qualified Beneficiaries other than the covered employee may continue coverage for up to 36 months from the date of the covered employee's Medicare entitlement, if the covered employee becomes entitled to Medicare and, within 18 months thereafter, has a Qualifying Event. You must allow continuants to add dependents if the dependents meet the special enrollment rules under the Health Insurance Portability and Accountability Act (HIPAA) or if the continuants acquire any new dependents after their Qualifying Event — if such a right applies to similarly situated active employees.

Ongoing Administration

You must allow continuants to change benefits annually if the option is available to active employees (i.e., flexible benefits plans/HMO dual option plans). Open Enrollment periods must be allowed for continuants on the same basis as for active employees. Continuants must be offered a conversion privilege at the end of the 18- or 36-month period, if one is available to active employees.

You must allow existing COBRA continuants to continue coverage as long as they meet the eligibility requirements, even if your group size falls below 20 full-time and/or part-time employees.

Payments

The employer or plan administrator must allow continuants to pay their first premium within 45 days of the date they elect coverage, if coverage is elected within the 60-day election period. You may not require any premium payment until 45 days from the date of election. You must allow a grace period of not less than 30 days for the payment of all subsequent premiums.

 

Disability Extension

A Qualified Beneficiary's (and that of any other covered members of the family) continuation period must be extended to

29 months from 18 months if the Social

Security Administration determines that the Qualified Beneficiary was totally disabled under Title 11 or XVI of the Social Security Act on the day of the Qualifying Event, or within the first 60 days of COBRA coverage, and the Qualified Beneficiary sends a copy of the determination notice to Ceridian before the end of the initial 18-month period and within the later of 60 days of the date of the notice from the SSA; the qualifying event date; the benefit termination date; or the date of the notice to the qualified beneficiary of the rules of the notice.

Other Coverages

You must allow continuant(s) to continue

COBRA coverage despite their becoming covered under a new group health plan if the new plan contains an exclusion or limitation with respect to any pre-existing condition of that continuant.

See Your Attorney

The complexity of the law — and the fact that judicial decisions affecting compliance can happen at any time — precludes a complete description of legal requirements. Please consult your attorney.