COBRA: Your Questions Answered
COBRA: Your Questions Answered

COBRA: Your Questions Answered

What is COBRA?

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, was passed in 1986 to provide a temporary continuation of healthcare coverage through employers for those who would have lost coverage based on certain events. As a general rule, COBRA applies to healthcare plans for private-sector employers with twenty or more employees.

Who is entitled to coverage?

COBRA covers people who were employees with qualifying coverage, but then lost their healthcare coverage based on certain qualifying events.

What is a qualifying event?

There is a range of different events that would qualify someone to receive coverage through COBRA; all of them are events that would result in the loss of health coverage for an employee or someone under the employee’s group coverage. These events include:

  • Termination of employment (for reasons other than gross misconduct)
    * Reduction of hours
    * Employee becomes disabled
    * Death or divorce of employee
    * Dependent child loses dependent status
    * Employee becoming entitled to Medicare

How do I handle the qualifying event notice? The election notice?

When one of these events occurs, the group health plan must be notified,* but depending on the particular event, this responsibility changes hands.* Within 30 days, the employer must notify the plan if coverage is lost because of termination, reduction of hours, death of a covered employee, or the employee becoming entitled to Medicare. Within 60 days, the employee must notify the group health plan if the qualifying event is divorce, legal separation, or loss of the child’s dependent status.

The benefits plan provider must provide the employee with an election notice within 14 days of receiving the qualifying notice. The election notice will include all information about the plan and what will happen if the employee opts into or waives COBRA coverage. Employees will have a minimum of 60 days after receiving the notice to choose whether or not to continue coverage with their current plan.

How long does coverage last?

Depending on the qualifying event, employees are entitled to different lengths of coverage. Generally, the maximum length of coverage is:

* 18 months for termination and/or reduction of hours
* 29 months for cases involving disability
* 36 months for death of a covered employee or divorce

Should I choose COBRA or look for a new plan?

COBRA usually ends up costing more than other available plans because employers can charge 102% of the cost of the same plan for their employees (the value of coverage plus 2% for administrative costs). However, some employees still choose COBRA because they want to keep their current network of providers. Also, if you are happy with your plan, you may not want to start over with a new deductible, even if your premium will probably be higher.

What are the consequences of non-compliance?

Failure to comply by not providing coverage or proper notification results in monetary penalties.

For more information about COBRA and how it may apply to you, check out the Department of Labor’s webpage.


_Sources: Department of Labor, TLNT.com

More to Discover

2019 Compliance Changes

2019 Compliance Changes

It’s critical that you’re aware of all the tax changes that could affect your organization in 2019. This session will include frequently asked questions, an overview of federal and state withholding updates and trends we are seeing in areas of Tax and ACA compliance. Speakers: Arlene Baker and James Schwantes Arlene Baker is a Senior Compliance Analyst with over 40 years of payroll and tax experience. She’s a member of the National Payroll Reporting Consortium focusing on IRS compliance, and she’s been a member of the national and local APA for 25 years. In 2003, Arlene was awarded the Ohio Payroll Professional of the Year award. James Schwantes is a Compliance Analyst with a legal and tax background. Prior to working at Paycor in the...

Proposed Department of Labor Rule to Update Regular Rate Requirements

Proposed Department of Labor Rule to Update Regular Rate Requirements

In late March, the Department of Labor (DOL) announced a proposed rule to clarify and update the regulations governing the regular rate requirements under the Fair Labor Standards Act (FLSA). Unless exempt, an employee’s regular rate of pay is used to determine how much he or she should be paid for working overtime. The FLSA generally requires overtime pay of at least 1.5 times the regular rate for hours worked past 40 hours per week. The proposed rule details what forms of payment employers can exclude when determining an employee’s regular rate of pay. The cost of the following items would no longer apply: Tuition programs Discretionary bonuses Payment for unused paid leave Wellness programs, fitness classes, gym access, onsite...

FLSA Law Update

FLSA Law Update

What new cases and issues are arising regarding FLSA? We’ll discuss the change from a narrow interpretation to a fair interpretation of exemptions by the U.S. Supreme Court and what other courts and the DOL think of it. We’ll also discuss the recently reintroduced opinion letters and the possible increase in the salary level threshold. Speaker: Brian Dershaw BRIAN G. DERSHAW is a partner in Taft Stettinius & Hollister’s Labor & Employment practice group. Brian has broad experience serving as counsel for companies of all sizes. He has appeared in state and federal trial and appellate courts in discrimination, harassment, retaliation, wrongful discharge, non-compete, trade secret and contract litigation. Brian works closely with...

Understanding FMLA Regulations

Understanding FMLA Regulations

What is the Family Medical Leave Act (FMLA?) The Family and Medical Leave Act (FMLA) is a federal law that allows eligible employees to take up to 12 weeks of unpaid leave in any given 12-month period for certain medical and family reasons without fear of losing their job. Signed into law in 1993, the FMLA is designed to help employees balance their work and family responsibilities while promoting equal employment opportunity for men and women. Who is Eligible for FMLA? An employee is eligible for FMLA leave if he or she has worked for a covered employer at least 12 months, completed at least 1,250 hours of work during the past 12 months and worked at a location within 75 miles of where the company employs 50 or more people. Keep in...