Take this Job N Shove It

In today’s business environment, with so many people losing their jobs, one big concern of people is what are their rights to continue benefits such as health insurance under COBRA. So this post is intended to give you some information on COBRA, who it applies to and how it works.

For all those interested COBRA refers to the Consolidated Omnibus Reconciliation Act. COBRA was passed in 1986 and 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.

In order for your employer to be subject to COBRA, they must have had at least twenty employees on more than 50 percent of it business days in the prior calendar year. Both part time and full time employees are used to calculate this, two part time employees count as one full time employee. Even if your employer was not subject to COBRA, many states, such as the State of Florida have similar benefit continuation statutes that apply to smaller employers.

You are entitled to COBRA coverage if you are a covered employee or the spouse or dependent child of the covered employee and a qualifying event as follows took place:

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

Employers must notify the group health insurer or provider of benefits of a qualifying event within 30 days after an employee’s death, termination, reduced hours of employment or entitlement to Medicare.

A person entitled to benefits under the group insurance 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.

In the event of a COBRA qualifying event, you generally must be sent an election notice not later than 14 days after the insurance company or 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.

Once you elect to COBRA coverage, you are entitled to COBRA benefits for up to 18 months. However some employers may elect to allow COBRA coverage for longer than 18 months.

Remember that you can only get COBRA benefits if your former employer continues to operate the group insurance plan. So if you employer shuts down and has not more insurance plan, they are not required to furnish COBRA benefits.

If you do not got the required COBRA notices from your former employer, there are civil actions that can be brought where you are entitled to damages for each day they are late in delivering your COBRA notice and this statute also provides for recovery of attorneys’ fees.

Since COBRA is a complicated area that has some new rules that have been effected by the Obama administration, I will continue to provide some more information on COBRA tomorrow.