What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires most companies that sponsor group health plans to offer their health plan participants, as well as the participants’ families, the temporary extension of health coverage at group rates in certain instances where coverage would otherwise end.
COBRA is offered to any employee, spouse or dependent that participates in a COBRA-qualified benefit plan and experiences a COBRA Qualifying Event (like termination of employment or divorce). Participants who are offered COBRA coverage can choose to either accept the continuation coverage or end their coverage.
How does COBRASecure work?
COBRASecure manages the mailing of notices, and the collection and payment of group health plan premiums for those individuals who are offered and choose COBRA coverage. COBRASecure provides all of the necessary documents and reports that help employers manage COBRA participants while maintaining 100% compliance with all federal COBRA regulations.
What are Qualifying Events?
Qualifying Events are specific occurrences that require an employer to offer COBRA continuation coverage to individuals who are covered under the group health plan. The Qualifying Event must cause a loss of coverage under the group health plan in order to lead to the option of COBRA coverage.
Employers are responsible for reporting certain Qualifying Events; for others, the employee is responsible for reporting the event.
Qualifying Events that trigger COBRA are:
- Termination of employment (employer reports)
- Reduction in hours (employer reports)
- Death of the covered employee (employer reports)
- Divorce or legal separation (employee reports)
- Employee’s entitlement to Medicare (employer reports)
- Loss of dependent status (employee reports)
- Employer’s Chapter 11 Bankruptcy (employer reports)
How long does COBRA coverage last?
The maximum coverage period is the longest possible duration of COBRA coverage. Below are the basic maximum coverage periods for various COBRA Qualifying Events:
Maximum coverage period of 18 months
- Termination of employment (voluntary and involuntary)
- Reduction in hours
Maximum coverage period of 36 months
- Death of the covered employee
- Divorce or legal separation
- Employee's entitlement to Medicare
- Loss of dependent status
Covered employees only experience more than an 18-month maximum coverage period when they are considered disabled and allotted the 11-month disability extension. The 36-month maximum coverage period only applies to the spouses and/or dependents of covered employees.
If you file for Chapter 11 bankruptcy, retirees, their spouses, and their dependents are then offered lifetime COBRA coverage. If you are filing Chapter 11 bankruptcy, please seek immediate legal counsel.