United States: An Employee's Rights And Responsibilities To Seek and Obtain COBRA Continuation Coverage

The prospect of losing one's employer-sponsored health insurance is a scary proposition. This is a quick guide of your rights and responsibilities to secure continuation coverage if you choose to do so following an event that causes you to lose coverage provided through an employee-sponsored group health plan.

Your Rights

The Consolidated Omnibus Budget Reconciliation Act, or what we commonly call COBRA, requires most group health plans to provide a temporary continuation of group health coverage that otherwise might be lost. There are three conditions that must be satisfied in order for you to be entitled to elect COBRA continuation coverage:

  1. Your group health plan must be covered by COBRA;
  2. A qualifying event must occur; and
  3. You must be a qualified beneficiary for that event.

Let's go through those conditions one by one.

1. Is your plan covered by COBRA?

COBRA covers group health plans sponsored by an employer (private-sector or state/local government) that employs at least 20 employees on more than half of its typical business days in the previous calendar year.

2. Did a qualifying event occur?

"Qualifying events" are events that cause an individual to lose his or her group health coverage. The type of qualifying event determines who is a qualified beneficiary for that event and the period of time that a plan must offer continuation coverage.

  • For a covered employee, the following are considered qualifying events if they cause the covered employee to lose coverage:
  • Termination of employment for any reason other than "gross misconduct"; or
  • Reduction in the number of hours of employment.

For the spouse or dependent child of a covered employee, the following are considered qualifying events if they cause the spouse or dependent child to lose coverage:

  • Termination of the covered employee's employment for any reason other than "gross misconduct";
  • Reduction in the hours worked by the covered employee;
  • The covered employee becomes entitled to Medicare;
  • Divorce or legal separation of the spouse from the covered employee; or
  • Death of the covered employee.

Additionally, for a dependent child of a covered employee, the loss of "dependent child" status under the insurance plan rules is considered a qualifying event if it causes the child to lose coverage. Under the Affordable Care Act, plans that offer coverage to children on their parents' plan must make the coverage available until the adult child reaches the age of 26.

3. Are you a qualified beneficiary?

A qualified beneficiary is an individual who was covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage. Only certain individuals can become qualified beneficiaries due to a qualifying event.

The type of the qualifying event determines who can become a qualified beneficiary when it happens. A qualified beneficiary must be a covered employee, the employee's spouse or former spouse, or the employee's dependent child. Additionally, any child born to or placed for adoption with a covered employee during a period of continuation coverage is automatically considered a qualified beneficiary.

Your Responsibilities

Within 90 days after you or your spouse became covered under a group health plan, you should have been provided with a COBRA general notice and a Summary Plan Description (SPD) for the plan. The SPD is a written document that gives important information about the plan, including what benefits are available under the plan, the rights of participants and beneficiaries under the plan, and how the plan works. The COBRA general notice should provide an explanation of any notices you must give to the plan to protect your COBRA rights.

Before a group health plan must offer continuation coverage, a qualifying event must occur, and the group health plan provider must be given notice of the qualifying event. Who must give notice of the qualifying event depends on the type of qualifying event.

  • The employer must notify the plan provider if the qualifying event is a termination or reduction in hours of employment of the covered employee; the death of the covered employee; a covered employee becoming entitled to Medicare; or bankruptcy of a private-sector employer.
  • You, as a covered employee or one of the qualified beneficiaries, must notify the plan provider if the qualifying event is a divorce, legal separation, or a child's loss of dependent status under the plan.

Depending on the plan's requirements, you will have a least 60 days to provide this notice, starting from the latest of: (1) the date on which the qualifying event occurs; (2) the date on which you lose (or would lose) coverage under the plan as a result of the qualifying event; or (3) the date on which you are informed, through the furnishing of either the SPD or the COBRA general notice, of the responsibility to notify the plan and the procedures for doing so. If your plan does not have reasonable procedures for how to give notice of a qualifying event, you can give notice by contacting the person or unit that handles your employer's employee benefits matters.

When the plan provider receives notice of a qualifying event, the plan provider must give the qualified beneficiaries an election notice, which describes their rights to continuation coverage and how to make an election. The notice must be provided to the qualified beneficiaries within 14 days after the plan administrator receives the notice of a qualifying event.

The election notice should contain all of the information you will need to understand continuation coverage and make an informed decision, whether or not to elect continuation coverage. It should also give you the name of the plan's COBRA administrator and tell you how to get more information.

If you elect continuation coverage, the coverage you are given must be identical to the coverage that is currently available under the plan to similarly situated active employees and their families. This is generally the same coverage that you had immediately before the qualifying event.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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