Continuation of health care coverage under Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that requires most group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated. COBRA requires continuation coverage to be offered to covered employees and their covered dependent(s) when group health coverage would otherwise be lost due to certain specific events. Those events include the death of a covered employee, termination or reduction in the hours of a covered employee’s employment for reasons other than gross misconduct, divorce from a covered employee, a covered employee becoming entitled to Medicare, and a child’s loss of dependent status (and therefore coverage) under the plan. The COBRA participant pays the full premium, since employer contributions no longer apply, plus a 2% administration fee. Specific information describing continuation coverage can be found in the Plan’s summary plan description (SPD), which can be obtained from your health plan or FBMC.
COBRA information packets are sent by the insurance carriers to terminating employees within fourteen (14) days of notification of termination from County service. The County's notification to the plans is through a biweekly listing issued after the employee's department processes the termination through the payroll system. Group medical, dental, vision and basic\optional life insurance coverage (if enrolled) ceases the last day of the pay period in which the termination date falls and for which the employee experiences a regular insurance deduction or made direct payments to the Benefits Administration Unit (if on an unpaid leave of absence). If you exercise your rights under COBRA, upon receipt of your initial premium the insurance plan will reinstate your coverage retroactive to the group benefits termination date (without a gap).
The HIPAA certificates will be issued by your medical insurance carrier, at the same time the COBRA notice is issued. For more information, please contact the insurance carrier. The employee or a family member has the responsibility of directly informing the Benefits Administration Unit of a divorce, or a child losing dependent status. Requests must be made on a timely basis (no later than 45 days from the qualifying event). Basic\optional life insurance coverage is not subject to COBRA. If covered under the basic or optional life plan, the terminating employee will have the opportunity to convert to a private policy without being subject to evidence of insurability and will receive a conversion notice by mail. Employees may convert up to the volume of life insurance in force at the termination of employment, or convert amounts as determined by the Metropolitan Life Insurance Company. To obtain the life insurance conversion rates, contact the insurance carrier at the phone number listed on the conversion notice.
- Healthcare Flexible Spending Accounts
- Continuation of Coverage for Health Plans
- Electing Continuation of Coverage
- Continuation of Coverage Costs
- Making Payments
- Periodic Payments
- Grace Periods
- Qualifying Events
- HIPAA Provisions
- Qualified Beneficiaries
- Healthcare FSA Plan
- Qualified Beneficiaries
- COBRA Rates
- Notification of Rights
Healthcare Flexible Spending Accounts (FSA) Continuation of Coverage Period
If you fund your Healthcare FSA entirely, you may continue your Healthcare FSA (on a post-tax basis) only for the remainder of the plan year in which your qualifying event occurs, if you have not already received, as reimbursement, the maximum benefit available under the Healthcare FSA for the year.
For example, if you elected a maximum Healthcare FSA benefit of $1,000 for the plan year and have received only $200 in reimbursement, you may continue your Healthcare FSA for the remainder of the plan year or until such time that you receive the maximum Healthcare FSA benefit of $1,000. Continuation coverage will be terminated before the end of the maximum period if any required premium is not paid on time. If your employer funds all or any portion of your Healthcare FSA, you may be eligible to continue your Healthcare FSA beyond the plan year in which the qualifying event occurs and you may have open enrollment rights at the next open enrollment period. There are special contribution rules for employer-funded Healthcare FSAs. If you have questions about your employer-funded Healthcare FSA, call FBMC at 1-800-342-8017.Back to Top
Continuation of Coverage for Medical, Dental and Vision Health Plans
You will be able to continue medical, dental and vision for up to 18 months if you lose group coverage due to termination of employment or reduction in hours. If your covered dependent(s) lost group coverage (for example, due to divorce, your death or child reaching the limiting age), coverage may be continued for up to 36 months from the qualifying event. See your Summary Plan Description (SPD) or certificate of coverage for other COBRA-qualifying events and explanation of your COBRA rights.Back to Top
Electing Continuation of Coverage Under Cobra
Each qualified beneficiary has an independent right to elect continuation coverage the latter of 60 days from the date of COBRA notice or qualifying event. For example, both the employee and the employee's spouse may elect continuation coverage, or only one of them. Parents may elect to continue coverage on behalf of their dependent children only. Additionally, payment must be received within 45 days of COBRA election. A qualified beneficiary must elect coverage by the date specified on the COBRA Election Form. Failure to do so will result in loss of the right to elect continuation coverage under the Plan. A qualified beneficiary may change a prior rejection of continuation coverage any time until that date.
In considering whether to elect continuation coverage, you should take into account that a failure to continue your group health coverage will affect your future rights under federal law. First, you can lose the right to avoid having pre-existing condition exclusions applied to you by other group health plans if you have more than a 63-day gap in health coverage, and election of continuation coverage may help you not have such a gap. Second, you will lose the guaranteed right to purchase individual health insurance policies that do not impose such pre-existing condition exclusions if you do not get continuation coverage for the maximum time available to you.
Finally, you should take into account that you have special enrollment rights under federal law. You have the right to request special enrollment in another group health plan for which you are otherwise eligible (such as a plan sponsored by your spouse's employer) after your group health coverage ends because of the qualifying event listed above. You will also have the same special enrollment right at the end of continuation coverage if you get continuation coverage for the maximum time available to you.Back to Top
Continuation of Coverage Costs
Generally, each qualified beneficiary may be required to pay 102 percent of the cost of group health coverage. For Healthcare FSAs, the cost for continuation of coverage is a monthly amount calculated and based on the amount you were paying via pre-tax salary reductions before the qualifying event.
The monthly COBRA premium for coverage is the monthly premium you were paying via salary reductions before the date of the COBRA qualifying event, plus any contributions made by your employer. Under COBRA, your premium must be paid by check or by money order. Administration fee of 2% may apply. The health plan will provide information on where to remit payments.
Making Payments for Continuation of Coverage
If you elect continuation of coverage, you do not have to send any payment for continuation coverage with the COBRA Election Form. However, you must make your first payment for continuation coverage within 45 days after the date of your election. (This is the date the Election Notice is post-marked, if mailed.) If you do not make your first payment for continuation coverage within that 45 days, you will lose all continuation coverage rights under the Plan. Your first payment must cover the cost of continuation coverage from the time your coverage under the Plan would have otherwise terminated up to the time you make the first payment. You are responsible for making sure that the amount of your first payment is enough to cover this entire period. You may contact FBMC to confirm the correct amount of your first payment (for FSAs). Your health plan will notify you of the exact premium payable. Instructions for sending your first payment for continuation coverage will be shown on your COBRA Election Notice/Form.Back to Top
Periodic Payments for Continuation Coverage
After you make your first payment for continuation coverage, you will be required to pay for continuation coverage for each subsequent month of coverage. Under the Plan, these periodic payments for continuation coverage are due on the first day of each month. If you make a periodic payment on or before its due date, your coverage under the Plan will continue for that coverage period without any break. Instructions for sending your periodic payments for continuation coverage will be shown on your COBRA Election Notice/Form.Back to Top
Grace Periods for Periodic Payments
Although periodic payments are due on the dates shown above, you will be given a grace period of 30 days to make each periodic payment. Your continuation coverage will be provided for each coverage period as long as payment for that coverage period is made before the end of the grace period for that payment. If you pay a periodic payment later than its due date but during its grace period, your coverage under the Plan will be suspended as of the due date and then retroactively reinstated (going back to the due date) when the periodic payment is made. This means that any claim you submit for benefits while your coverage is suspended may be denied and may have to be resubmitted once your coverage is reinstated.
If you fail to make a periodic payment before the end of the grace period for that payment, you will lose all rights to continuation coverage under the Plan.Back to Top
COBRA Qualifying Events
As a general rule, there is a COBRA "qualifying event" if:
- a covered employee’s termination of employment occurs other than due to gross misconduct. This includes retirement.
- there is a reduction in a covered employee’s hours of employment.
- a covered employee dies.
- a covered employee becoming entitled to Medicare.
- a covered employee experiences a divorce or legal separation.
- a child ceases to qualify as a dependent under the terms of the plan.
HIPAA Provisions under COBRA
HIPAA gives a person already on COBRA specific enrollment provisions to add dependents only if such a person:
- acquires a new dependent, or
- if an eligible dependent declines coverage because of alternative coverage and
- later loses such coverage due to certain qualifying reasons
Spouse or dependents who are added under this paragraph do not become Qualified Beneficiaries and their coverage will end at the same time coverage ends for the person who elected COBRA and later added them.Back to Top
Qualified Beneficiaries under COBRA
Except for your employer’s Healthcare FSA Plan, the same open enrollment rights are extended to COBRA qualified beneficiaries as are available to active employees.Back to Top
Healthcare FSA Plan under COBRA
In accordance with COBRA, your employer’s plan offers limited COBRA continuation rights to qualified beneficiaries who have under spent their MFSA accounts as of the date of the COBRA qualifying event.
Unless otherwise elected, the spouse and dependents of the person electing COBRA will be covered. Only qualified beneficiaries have election rights and may elect separate COBRA coverage with:
- a separate Healthcare FSA at the elected annual limit in effect at the time of the COBRA qualifying event and
- a separate COBRA premium through the end of the plan year in which the COBRA qualifying event occurs.
- the person must be a covered employee, the spouse of a covered employee, or the dependent child of a covered employee; and
- the person must be covered by a group health plan immediately before the qualifying event occurs.
Note: It is the qualified beneficiary’s responsibility to inform the plan administrator within 60 days of a divorce/legal separation or a child losing dependent status under the plan. In addition, the qualified beneficiary must report in writing all address changes and legal residence of covered dependents, if different than the insured.Back to Top
Deadline for selecting continuation of health care coverage under (COBRA)
A qualified beneficiary must elect COBRA coverage within 60 days from whichever date is later
- the employee’s loss of group health plan coverage or
- the envelope postmark date that the Election Notice was mailed to the qualified beneficiary
If a qualified beneficiary fails to meet this deadline, he or she will be deemed to have declined COBRA coverage.Back to Top
COBRA RatesBack to Top
Notification of Rights under COBRA
COBRA information is sent by the health plans to terminated employees, or part-timers losing eligibility due to reduced hours, within 14 days of notification of termination from County service or reduction in hours. The plans also provide COBRA notice to dependent children losing eligibility due to reaching the age limit. For loss of group insurance coverage due to events such as divorce, marriage of a dependent child, the Benefits Administration Unit will notify the plans to issue COBRA information upon receipt of timely notice from the employee/dependent.Back to Top
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