BASIC COBRA
Frequently Asked Questions

What is the general purpose of the COBRA law?

Under normal circumstances, only active employees can participate in employers group health insurance plans. Prior to COBRA, when an employee left the company, they and any covered family members lost their health insurance as well, since the employee no longer fit the definition of an active employee. If the employee or a family member was ill, they would be unable to obtain insurance in the open market since they are already sick. Congress, in passing the COBRA law, remedied this situation by mandating employers simply stand at the back door of the business and offer the ex-employee and/or the covered dependents the opportunity to buy the employers health insurance back from the employer, even though the employee doesn't work there anymore. In this way, the sick employee or dependent stays insured in the private sector (your health plan) and off Medicaid, or other welfare benefit programs.

What is the purpose of the initial notification?

It serves two purposes. First it highlights the potential COBRA benefits that may be available to the covered employee and/or covered dependents in the future. And, secondly, it details the covered employee and/or covered dependents notification obligations to the plan administrator regarding divorces and dependent children ceasing to be dependents under the terms of the plan.

How many days does an employee have to be covered by the health insurance plan in order to be eligible for COBRA coverage?

One! If the employee is covered by the health plan on January 1, 1997 and quits on January 2, 1997, the ex-employee is entitled to COBRA benefits. It is for this reason alone all employers should have a waiting period of at least 30 days before health insurance benefits begin. This helps eliminate COBRA administration on employees who only work for the employer a week or two.

A single covered employee quits and elects COBRA coverage. He then marries while on COBRA. Can he add his new spouse to the plan?

If the health plan rules allow an active employee to add a new spouse (within 30-31 days, etc.), then the qualified beneficiary also has this right. However, the new covered spouse does not gain the rights of a “qualified beneficiary” and can only stay covered for as long as the qualified beneficiary is covered.

What is a COBRA qualifying event?

A COBRA qualifying event occurs when an event listed in the COBRA statute occurs, and the event causes an employee, spouse, or covered dependent to lose health insurance under the employers group health plan. To lose health insurance means the individual ceases to be covered under the same terms and conditions they were covered under before the event happened.

What is the purpose of the qualifying event notice?

Unlike the initial notice which highlights covered participants potential COBRA rights, the qualifying event notice is a notice of their actual rights under COBRA. It is a “contract” offer between the employer and the qualified beneficiary. It details the terms and conditions of the contract, such as premium rates, due dates, coverage periods, etc.

What is the time frame for sending the qualifying event notice?

The hands-on plan administrator has in general 14 calendar days to provide the notice from the date they learn the event has occurred.

Who has to be notified?

All qualified beneficiary’s have to be notified of their COBRA rights. If all qualified beneficiary's live at one address, then one notification can be sent as long as it is addressed to the entire family. If a qualified beneficiary does not live at the home address (for example a dependent child from a previous marriage that is living with the ex-spouse in another location), then a separate notice would need to be sent. This is assuming you have the information on this other dependent in the employee’s file.

Is first class mail still okay for the qualifying event notice?

Yes. The federal courts have consistently held that first class mail is sufficient for COBRA purposes. Again, first class mail is deemed received unless it is returned to the sender. You prove you mailed it through your testimony and documentation procedures.

Is the 60 day COBRA election period a minimum or maximum period of time?

The COBRA statute established a “minimum” COBRA election period of 60 days. It is up to the employer to establish the maximum time frame. All employers want the minimum 60 day election period to also be the maximum 60 day election period, so make sure your COBRA language clearly states the election period is a maximum 60 day period of time. It is highly recommended your COBRA “contract” qualifying event notice include the actual last date to elect.

Once a qualified beneficiary has elected, how many days does he have to pay for the coverage?

45 days measured from the date of election.

Our company has several group health insurance plans. We also have an annual open enrollment period where active employees can change coverage. Are the open enrollment rights available to qualified beneficiaries on COBRA?

Yes. Remember, there is no such thing as a COBRA group health plan. If a qualified beneficiary is on “COBRA,” they are simply buying the health insurance plan from you that all the active employees are covered by. Therefore, they do have open enrollment rights.

A qualified beneficiary has reached the end of her 36 months of required COBRA continuation coverage. She is 64 and three-quarters. Are we required to keep her covered until she is 65?

No, according to federal COBRA statute. While she will have a potential gap in coverage, you have provided her the required length of coverage under COBRA and are not obligated to go beyond that period. Please note, however, some state laws (California, Georgia, etc.) require this potential gap be covered under the individual state continuation rules. Please check with your state Department of Insurance for any state law that may impact this situation.

What is the grace period on monthly COBRA premiums?

In general, a qualified beneficiary has a 30 day grace period to pay premiums, measured from the first day of the monthly benefit period. If, however, the employer or plan has a grace period longer than 30 days, then the qualified beneficiary is provided the longer grace period.

If I'm going to cancel COBRA coverage on a qualified beneficiary for non-payment of premium, am I required to notify them?

YES! After June 1, 1997 the answer is yes. In addition to a termination of COBRA notice, an updated Certificate of Health Insurance Portability would also have to be provided. Sample notices are contained in the guide for this purpose.

Does every group health plan have an individual conversion policy?

No. While most insured plans, HMOs, PPOs, etc. have individual conversions, most partially self-funded plans do not. Check your health insurance contract to determine if the individual policy is available.

If our plan does not have a conversion policy, are we required to notify the qualified beneficiary that COBRA coverage is ending?

After June 1, 1997 provisions of the Health Insurance Portability and Accountability Act of 1996 require employers to notify all qualified beneficiaries when their COBRA coverage ceases. In addition, an updated Certificate of Health Insurance Portability is also required to be sent when the COBRA coverage ends.