http://www.hcvadvocate.org/news/newsLetter/2007/advocate0907.html#5
Disability & Benefits: COBRA
Jacques Chambers, CLU
Extending Your Employer-Based Health Insurance
Passed in 1984, COBRA (Comprehensive Omnibus Budget Reconciliation Act) was originally a federal law that requires employers to allow employees and dependents losing health insurance to stay on the employer’s plan.
Because small employers and certain other employee groups do not come under this federal law, many states have enacted “Mini-COBRA” statutes to extend coverage for some who are not covered under the federal law.
The Federal COBRA Continuation Law
Who is covered by the federal law? Almost all employers who provide health insurance to their employees except:
The federal government and its employees;
Churches and most religious affiliated employers such as church-owned hospitals; and
Employers with less than 20 employees.
NOTE: See state “mini-COBRA” laws in several states covered below.
How does the law work? If you are covered under an employer’s health insurance plan and are losing coverage under your employer’s health insurance because you are terminating employment by resignation or firing or your hours are reduced so that you’re no longer eligible, COBRA allows you to continue coverage under the employer’s health insurance plan.
Your dependents also have a right to continue their coverage if you die or if your spouse divorces you or if your children are no longer eligible to be insured due to their age.
The only employees who cannot continue their coverage under COBRA are those who are terminated for “gross misconduct,” which usually means due to a violation of law such as theft or embezzlement.
How long can I stay on my employer’s health plan?
If you lose coverage due to termination or reduction in hours, you can stay on the plan for an additional 18 months.
If you are disabled when your coverage ends, you may stay on the plan for 29 months, which is how long it takes to get Medicare, provided you meet the requirements of that separate law.
If you are the spouse of an employee and lose coverage due to the death of the employee or due to divorce, you can continue coverage for an additional 36 months.
If you are the dependent child of the employee and you lose coverage due to passing the age limit for dependent children, you can continue the coverage for an additional 36 months.
Can that time ever be cut short? Yes, you will lose your COBRA continuation rights before the time limit expires if:
You fail to make a premium payment by the due date and grace period. Coverage lost due to late premium payment is not normally reinstated.
Your employer stops all health insurance plans for all employees of all of their companies. If, for example, your former employer goes broke and lays off everyone, then there is no coverage left for you to continue.
You become eligible for another group health insurance plan from another employer that covers all of your pre-existing conditions.
You become eligible for Medicare. (NOTE: If you are on COBRA continuation and become eligible for Medicare, your right to COBRA continuation stops; conversely if you are on Medicare when you become eligible for COBRA continuation, you may keep both up to the maximum COBRA period.)
What are the benefits of the COBRA plan coverage? COBRA is only a law, not a plan. It says that you must be allowed to stay on exactly the same coverage you had when you were an active employee. If your employer allows employees to switch plans once a year in an open enrollment, you must be given the same privilege. This also means if your employer changes plans, your plan changes too.
Does this only apply to health insurance? It applies to all types of health insurance plus all health-related plans, such as dental, vision, or prescription drug benefits. It does NOT allow continuation of group life insurance or group long term disability coverage. See the plan document for those plans for any continuation they may provide.
Does my whole family have to take the Continuation? No, each insured member of your family has their own right to COBRA continuation and may decide to continue the coverage or not.
How much does it cost? This is the big problem with COBRA; to stay on your employer’s plan, you must pay the entire cost of the insurance including what the employer used to pay on your behalf plus what you used to pay through payroll deduction plus a 2% administrative fee. For a single individual, this can be $150 or more per month, and much more for the spouse and dependent children.
Is there any help with paying those premiums? If you qualify for Medicaid in your state, most states have a plan that will pay the insurance premiums for you. If you are also dealing with HIV/AIDS, many states have set aside some Ryan White funds to pay health insurance premiums. Some doctors and hospitals have been known to pay the premiums so their bills will continue to be paid, but it’s not common.
How do I get on the COBRA continuation? If you are losing your employer’s health insurance, the employer is required to mail you a notice that tells you about COBRA and how much the plan will cost. The employer must also give you the chance to continue the coverage, usually with an enrollment form.
You have 60 days from receiving the notice to accept the coverage. You will owe premiums all the way back to the date you lost coverage but you will have an additional 45 days to pay it from the date you notify the employer of your intention to continue.
State Mini-COBRA Statutes
In addition to the federal law, over 40 states have enacted laws which permit some people not covered under the federal law to extend their coverage. These laws generally extend the right to stay on the employer’s health plan but the similarity ends there. State laws vary on how long a person may stay on the employer’s plan. They cover different groups of people although almost all states with such laws provide coverage for people working for groups with from 2 – 19 employees.
To briefly summarize the various state laws:
Arkansas: Requires employers with 2-19 employees to offer COBRA for 4 months
California: Cal-COBRA extends coverage for 36 months and covers all insured group health plans regardless of size.
Connecticut: State COBRA mirrors federal law for small employers.
Colorado: Covers small group employers.
Florida: The state law covers groups of 2-19, however, the employee must request the extension within 30 days of termination.
Georgia: Plans with 2-19 employees can qualify for 3 full months, only if covered for at least six months prior.
Illinois: Plans with 2-19 employees can qualify for 9 months. Dependents can qualify for 2 years.
Iowa: Plans with 2-19 employees can qualify for 9 months.
Kansas: Plans with 2-19 employees can qualify for 9 months.
Kentucky: Plans with 2-19 employees can qualify for 18 months.
Louisiana: Plans with 2-19 employees can qualify for 12 months.
Maine: Plans with 2-19 employees can qualify for 12 months.
Maryland: Plans with 2-19 employees can qualify for up to 18 months if the employee is terminated without cause. Employees terminated for cause are entitled to receive 6 months of continuation coverage. Must have been covered under the group contract and been employed for 3 months.
Massachusetts: Plans with 2-19 employees can qualify for 18 months.
Minnesota: Plans with 2-19 employees can qualify for 18 months.
Mississippi: Plans with 2-19 employees can qualify for 12 months.
Missouri: Plans with 2-19 can qualify for 9 months.
Nebraska: Plans with 2-19 employees can qualify for 6 months.
New Jersey: Plans with 2-19 employees can qualify for 18-36 months, New Jersey State continuation applies to church plans also.
New Mexico: Plans with 2-19 employees can qualify for 6 months.
New York: Guaranteed issue law that require insurers to cover anyone who applies, and plans with 2-19 employees can qualify for 18 months anyway.
Nevada: Plans with 2-19 employees can qualify for 18 months.
North Carolina: Plans with 2-19 employees can qualify for 18 months.
North Dakota: Plans with 2-19 employees can qualify for 39 weeks.
Ohio: Employees must be terminated from employment involuntarily, have had three months of prior continuous coverage, and be eligible for Unemployment Compensation.
Oklahoma: Plans with 2-19 employees can qualify for 1 month.
Oregon: Plans with 2-19 employees can qualify for 6 months.
Rhode Island: Plans with 2-19 employees can qualify for 18 months.
South Carolina: Plans with 2-19 employees can qualify for 6 months.
South Dakota: Plans with 2-19 employees can qualify for 18 months.
Tennessee: Plans with 2-19 employees can qualify for 3 months.
Texas: Employers with 2-19 employees can qualify for 6 months.
Utah: Plans with 2-19 employees can qualify for 6 months.
Vermont: Plans with 2-19 employees can qualify for 6 months.
Virginia: The employer can choose between offering 90 days of continuation coverage under the current group policy rate or conversion to an individual policy.
West Virginia: Plans with 2-19 employees can qualify for 18 months.
Wisconsin: Plans with 2-19 employees can qualify for 18 months.
Wyoming: Plans with 2-19 employees can qualify for 12 months.
Whether your state is listed above or not, it is important to check with your state’s Department of Insurance as new states add coverage and existing laws may be substantially different from the federal COBRA provisions.
My health insurance is very important to me. What should I watch out for when continuing it under COBRA?
Don’t wait for the mailing from your employer. Ask for it when your coverage is about to stop. Some employers may insist on mailing it to you, but you will know when to expect it and can follow up if it doesn’t arrive.
Don’t refuse the COBRA extension even if you know you won’t take it. Let the 60 day period expire. That way, if there’s a medical emergency during those 60 days, you can take the COBRA and have the coverage.
Pay your premiums on time! If you are ever late, they can cancel you and they do not have to reinstate your coverage. When possible stay one month ahead so you have time to correct any mix-ups or lost payments.
Make sure you keep a record of everything you send and everyone you talk to about your COBRA continuation. When possible, send materials Return Receipt Requested or deliver the documents and payments in person and get a written receipt.
Be very careful if your employer hires a COBRA administrator to handle the COBRA Continuation. These companies operate with the goal of getting everyone off COBRA that they can legally get off.
If you’re disabled when your coverage stops, learn the rules for extending the COBRA to Medicare. They are complicated and most employers don’t understand them.
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