When an employer terminates an employee's healthcare coverage, that employee often earns healthcare protection rights under the Consolidated Omnibus Budget Reconciliation Act, or COBRA. Now, COBRA coverage is confusing—we often encounter questions regarding COBRA, a worker's rights to COBRA coverage, and the intricacies of COBRA coverage. That's why we're taking some time today, as your COBRA experts, to answer some of the most common questions that we encounter.
What Is COBRA?
In 1986, Congress passed the COBRA health benefit provision. COBRA continuation health coverage is a provision that provides temporarily extended healthcare coverage, even when that coverage would otherwise have been terminated. COBRA was a provision put in place to protect those who could suffer from unplanned severed coverage.
Who Is Eligible for COBRA?
As JustBlog points out in their article What is COBRA? A Simple Overview of COBRA Benefits and Coverage: “You must meet three basic requirements to be entitled to COBRA.
- Your group health plan must be covered by COBRA
- A qualifying event must occur
- You must be a qualified beneficiary”
Now, let's assess each point individually. First of all, your existing healthcare plan must continue coverage if it is affected by COBRA. Most health insurance plans provided by employers who have more than 20 employees fall under coverage from COBRA. If you work or worked for an employer with fewer than 20 employees, you may still be covered by COBRA, specifically if your state's legislation
To address the second point, the same article defines a “qualifying event”—you may be entitled to COBRA benefits due to any of the following:
- “Termination or reduction in hours of covered employee (with exception of gross misconduct)
- Divorce or legal separation from covered employee
- Death of a covered employee
- Covered employee becoming entitled to Medicare
- Child's loss of dependent status”
Now, who counts as a “qualified beneficiary?” Many people qualify as COBRA beneficiaries, and the Department of Labor notes these qualification guidelines:
“A qualified beneficiary generally is an individual covered by a group health plan on the day before a qualifying event who is either an employee, the employee's spouse, or an employee's dependent child. 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.”
How Long Does COBRA Coverage Last?
COBRA coverage duration can vary depending on the qualifying event. For a termination, coverage can last for 18 months, and it may cover the employee, his or her spouse, and dependent children.
- If an employee enrolls in Medicare, the spouse and any dependent children may be covered for up to 36 months.
- If a divorce or legal separation is the source of healthcare severance, COBRA coverage can, once again, cover a spouse or dependent child for 36 months.
- If the employee providing coverage to his or her family should pass away, COBRA may still provide coverage for the spouse and any dependent children.
- If a person loses their status as a “dependent child” under their current healthcare coverage, COBRA may extend coverage to that person for up to 36 months.
Is COBRA Coverage Free?
Unless your employer offers healthcare coverage that explicitly covers COBRA costs after termination of normal healthcare coverage, then the beneficiary will have to pay the costs of COBRA coverage. Although you may be entitled to coverage from the Consolidated Omnibus Budget Reconciliation Act, you may still have to pay the cost of healthcare coverage. The employer, or previous employer, is not required to pay the costs of healthcare coverage under COBRA, instead the beneficiaries may simply opt to continue the same benefits coverage at their own expense.
In addition to the insurance costs that would incur normally, those who choose to utilize COBRA coverage may have to pay an additional two percent of their regular health insurance costs as an administrative charge for COBRA services.
Do I Have to Use COBRA Coverage?
No, candidates are not required to utilize COBRA coverage. COBRA extends the same healthcare options that an employer previously provided beyond the term of that provision. The beneficiary does not have to continue the same coverage as was provided by that employer.
In addition, a beneficiary may choose to utilize COBRA provisions even after a hiatus from the employer's previous coverage. A beneficiary may be eligible to gain COBRA coverage, even after opting out of an employer's offered healthcare coverage through COBRA. COBRA coverage can be retroactively activated up to 60 days after a beneficiary's possible election date.
Have My COBRA Rights Been Violated?
If you have an employer which fails to provide notice that you are eligible for COBRA coverage, you may be entitled to compensation. Employers are obligated to extend a COBRA notice of your right to continue a medical coverage after a termination. If you haven't received a notice of COBRA policies and coverage, you may be entitled to penalties. As Benefits Notes points out, “A court can impose on an employer a penalty of up to $110 a day for failure to provide that COBRA notice.” If you feel that your COBRA rights have been violated, get in touch with an attorney at The Martin Law Group, LLC.
The Martin Law Group COBRA Attorneys
Here at The Martin Law Group, we specialize in benefit claims. If you feel as though you've been denied your COBRA benefits, we may be able to help. Get started with a free initial consultation with our law firm.