Advanced COBRA: 301 • updated December, 2014

Now the real fun begins. You’ve notified your COBRA Qualified Beneficiaries of their Qualifying Event. Now sit back and wait. They need to decide if they want the coverage…and they get up to two months to decide.

So let’s review the member-side of COBRA. Elections, payments, and deadlines, oh my! It really doesn’t have to be that scary, honest.

Electing COBRA
The Qualified Beneficiary (QB) has 60 days to elect or decline COBRA coverage. That 60-day clock starts running from the date the Qualifying Event Notice was provided, or the date active coverage ended (whichever is later).

Paying for COBRA
Once a QB says yes to the coverage, he or she has 45 days to pay the first premium, and the payment must include all retroactive premiums to the start date of COBRA. After the initial premium payment is sent in, the member has a 30-day grace period to pay subsequent monthly premiums. For example, for April coverage, he would have until April 30th to remit premium.

Insufficient payment
What if the person pays less than what they owe for COBRA? You have to send them a notice of the underpayment and allow them 30 days from the date of your letter to pay up.

Cost of COBRA
COBRA members must pay the full cost of coverage. You can charge an additional 2% to cover administrative costs. If you are using a COBRA vendor, they will typically charge that 2% fee and retain it for their services. COBRA premiums are linked to your active employee health plans. If you receive an increase or decrease in your rates, your COBRA members will also be affected by these changes.

COBRA termination
If the member stops paying their COBRA premium, obviously their coverage will end. It will also end if your group health plan terminates altogether (if not replaced with another group-based plan), the member begins coverage under another group health plan (if no pre-existing condition waiting periods apply), or the member becomes entitled to Medicare after enrolling on COBRA.

Duration of COBRA
Coverage COBRA coverage can continue for up to a maximum of 18 months in the case of a reduction of hours or a termination of employment. For all other Qualifying Events, COBRA typically continues for up to 36 months. But every rule was made to be broken, so here are the exceptions:

Exception for Disability
The 18 months of COBRA can be extended for the entire family for an additional 11 months (a total of 29 months) if just one covered family member is disabled. He must be determined by the Social Security Administration to have been disabled at some time before or during the first 60 days of COBRA and must continue to be disabled throughout the rest of the initial 18 months on COBRA. But he has to send your company the disability certification letter within 60 days of receiving it from the government! Note that you can charge up to 150% of the premiums during the 11-month extension for all members of the family who continue on COBRA.

Exception for Medicare
Eligibility The 18 months of COBRA for family members can be extended if the employee became eligible for Medicare before terminating active coverage. The dependents can have up to 36 months on COBRA, minus the number of months the employee was eligible for Medicare before the COBRA qualifying event. The minimum time on COBRA will not fall below 18 months under this calculation.

Exception for Subsequent Events
In some cases, a dependent can have her COBRA extended from 18 months to 36 months if there is a second Qualifying Event. For example, the employee is terminated (spouse receives 18 months COBRA) and during the 18 months they are divorced. The ex-spouse would have a second Qualifying Event, and would be eligible for a total of 36 months of COBRA (from her initial COBRA start date).

This article is provided for informational purposes only. Please contact your attorney and/or accountant to determine if this information may affect your business. © 2015 GHB Insurance

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