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COBRA Insurance Laws

Posted on: March 12th, 2012 by Cobra Insurance Guide

COBRA Insurance and RetirementPeople have lots of questions about COBRA Insurance laws and how they impact their choices for health insurance after losing, quitting, or retiring from a job.  There are two types of COBRA Insurance laws that people are interested in.  First, people want to know about the actual federal COBRA insurance law that lays out eligibility and who can sign up for COBRA insurance.  Secondly, people want to learn about COBRA insurance laws regarding what employers must do.  We will cover both subjects in this blog posting.

First, let’s take a look at the COBRA insurance laws for eligibility that were laid out in the 1986 federal COBRA insurance law.  There are three basic categories laid out in the law that determine who is eligible for COBRA insurance – the type of employer sponsored health insurance plan, the event that caused someone to lose coverage, and the people who are eligible for COBRA coverage.

1.  Qualifying Plan: This term refers to the type of group health insurance plan your insurer had.  Under the COBRA insurance laws that plan must cover at least 20 employees, or their part time equivalents, for the employee or their family members to be eligible for COBRA insurance.

2.  Qualifying Event: This refers to how the employer sponsored group health insurance coverage was lost.  Many people think that you are only eligible for COBRA insurance if you are laid off, but in fact you are also eligible under the COBRA insurance laws if you quit your job or retire from your job.  Moreover, there are many events that can make family members eligible for COBRA insurance.  Some examples are divorce from the covered spouse (even if they continue working at the company), death of the covered spouse, and losing dependent child status.  The qualifying event is also an important piece of the law because it outlines the length of time that people are eligible.  The general rule of thumb is that COBRA insurance coverage lasts for 18 months but in some cases like divorce for example, benefits can be extended to 36 months in many cases.

3.  Qualifying Person:  The last piece of the federal COBRA insurance law refers to who is eligible to continue health insurance coverage with COBRA.  Basically what the law states is that anyone who was covered during employment can be covered with COBRA.  This generally includes the covered employee, spouse, and dependent children. For a retiree, this would include the retiree, retiree’s spouse, or retiree’s dependent children.

Now let’s take a look at the basic COBRA insurance laws for employers.

  • You must notify employees and spouses that would be covered through the COBRA program of their right to COBRA insurance coverage at the start of the health insurance plan.
  • You must notify employees and other covered beneficiaries within 14 days of the date that the covered individual(s) qualifies for COBRA insurance. The company is required by law to provide all the necessary forms and documents. Normally this should be through certified mail or in person with a signed form acknowledging they received it.
  • You must keep accurate records that you properly notified the employees of changes during the policy and at the time of COBRA qualification.
  • You must track COBRA election periods and the length of time that an employee has been enrolled in coverage under the law.
  • You must provide invoices to COBRA informing them of the premium payments and any short bill payments. These must be balanced and recorded.
  • You must keep all records of correspondence regarding COBRA coverage.
  • If your plan changes, you must notify COBRA, through the entire time of coverage.
  • You must notify the employee when insurance benefits terminate.

 

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