The Center For Debt Management
Debt Relief

Debt Consultation

Debt Settlement

Debt Consolidation

Debt Management

Credit Counseling

Filing Bankruptcy

Budget Software

Tax Debt Relief

Student Debt

Business Debt

Stop Foreclosure

Credit Report

Legal Resources

Credit and Financing

Financial Resources

Income Resources

US Tax Center

Insurance Center


Financial Library

Financial Bookstore


 

FAQs About COBRA
Continuation Health Coverage

What is COBRA continuation health coverage?

Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986.  The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.


What does COBRA do?

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates.  This coverage, however, is only available when coverage is lost due to certain specific events.  Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves.  It is ordinarily less expensive, though, than individual health coverage.


Who is entitled to benefits under COBRA?

There are three elements to qualifying for COBRA benefits.  COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events:

Plan Coverage - Group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA.  Both full and part-time employees are counted to determine whether a plan is subject to COBRA.  Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

Qualified Beneficiaries - 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.

Qualifying Events - Qualifying events are certain events that would cause an individual to lose health coverage.  The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health coverage to them under COBRA.  A plan, at its discretion,  may provide longer periods of continuation coverage.

Qualifying Events for Employees:

  • Voluntary or involuntary termination of employment for reasons other than gross misconduct

  • Reduction in the number of hours of employment

Qualifying Events for Spouses:

  • Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee<
  • Covered employee's becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

Qualifying Events for Dependent Children:

  • Loss of dependent child status under the plan rules
  • Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
  • Reduction in the hours worked by the covered employee
  • Covered employee's becoming entitled to Medicare
  • Divorce or legal separation of the covered employee
  • Death of the covered employee

How does a person become eligible for COBRA continuation coverage?

To be eligible for COBRA coverage, you must have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees.  COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.


What group health plans are subject to COBRA?

The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments.


What process must individuals follow to elect COBRA continuation coverage?

Employers must notify plan administrators of a qualifying event within 30 days after an employee's death, termination, reduced hours of employment or entitlement to Medicare.

A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child's ceasing to be covered as a dependent under plan rules.

Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice that a qualifying event has occurred.  The individual then has 60 days to decide whether to elect COBRA continuation coverage.  The person has 45 days after electing coverage to pay the initial premium.


How long after a qualifying event do I have to elect COBRA coverage?

Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage.  Each qualified beneficiary may independently elect COBRA coverage.  A covered employee or the covered employee's spouse may elect COBRA coverage on behalf of all other qualified beneficiaries.  A parent or legal guardian may elect on behalf of a minor child.  Qualified beneficiaries must be given at least 60 days for the election.  This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator.  The election notice must be provided in person or by first class mail within 14 days after the plan administrator receives notice that a qualifying event has occurred.


How do I file a COBRA claim for benefits?

Health plan rules must explain how to obtain benefits and must include written procedures for processing claims.  Claims procedures must be described in the Summary Plan Description.

You should submit a claim for benefits in accordance with the plan's rules for filing claims.  If the claim is denied, you must be given notice of the denial in writing generally within 90 days after the claim is filed.  The notice should state the reasons for the denial, any additional information needed to support the claim, and procedures for appealing the denial.

You will have at least 60 days to appeal a denial and you must receive a decision on the appeal generally within 60 days after that.

Contact the plan administrator for more information on filing a claim for benefits.  Complete plan rules are available from employers or benefits offices.  There can be charges up to 25 cents a page for copies of plan rules.


Can individuals qualify for longer periods of COBRA continuation coverage?

Yes, disability can extend the 18 month period of continuation coverage for a qualifying event that is a termination of employment or reduction of hours.  To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must:

  • Have a ruling from the Social Security Administration that he or she became disabled within the first 60 days of COBRA continuation coverage

  • Send the plan a copy of the Social Security ruling letter within 60 days of receipt, but prior to expiration of the 18-month period of coverage

If these requirements are met, the entire family qualifies for an additional 11 months of COBRA continuation coverage.  Plans can charge 150% of  the premium cost for the extended period of coverage.


Is a divorced spouse entitled to COBRA coverage from their former spouses  group health plan?

Under COBRA, participants, covered spouses and dependent children may continue their plan coverage for a limited time when they would otherwise lose coverage due to a particular event, such as divorce (or legal separation).  A covered employee s spouse who would lose coverage due to a divorce may elect continuation coverage under the plan for a maximum of 36 months.  A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation.  After being notified of a divorce, the plan administrator must give notice, generally within 14 days, to the qualified beneficiary of the right to elect COBRA continuation coverage.

Divorced spouses may call their plan administrator or the EBSA Toll-Free number, 1.866.444.EBSA (3272) if they have questions about COBRA continuation coverage or their rights under ERISA.


If I waive COBRA coverage during the election period, can I still get coverage at a later date?

If a qualified beneficiary waives COBRA coverage during the election period, he or she may revoke the waiver of coverage before the end of the election period.  A beneficiary may then elect COBRA coverage.  Then, the plan need only provide continuation coverage beginning on the date the waiver is revoked.


Under COBRA, what benefits must be covered?

Qualified beneficiaries must be offered coverage identical to that available to similarly situated beneficiaries who are not receiving COBRA coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation coverage).  A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries.  Qualified beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.


When does COBRA coverage begin?

COBRA coverage begins on the date that health care coverage would otherwise have been lost by reason of a qualifying event.

Click Here To Continue ...

Deep In Debt?  —  Call 1800 DEBT.COM  —  Get Help Today!


 
Over 2,000 Pages of Content
Center For Debt Management

Center For Debt Management

The Center For Debt Management

Helping Consumers Save Money and Reduce Debt Is Our Only Business!

We invite you to explore the sectors listed below. We promise that you'll find exceptional values, offers and resources to reduce your living expenses and to enjoy life! But First—if you're over-your-head in debt—get a free no-obligation debt consultation right now!
 


Debt Management and Financial Services! The Internet's oldest and most comprehensive debt management agency! Resources for debt management, consumer credit counseling, debt consolidation loans, debt settlements, legal aid, financial aid, credit and financing, credit reports, budget software, insurance, income resources, tax assistance and more. Get out of Debt! Call Now — 1800DEBT.COM

Established In 1989 and Serving The Online Community Since 1992!

Get Out Of Debt: Call 1800Debt.com

Center For Debt Management