Intermediate COBRA: 201 • updated December, 2014

The devil is in the details. And there are lots of details to be aware of when talking about COBRA. Once you know you have to offer continuation coverage, you’ll find that it’s all about the notifications.

Well, that and deadlines. Let’s deal with the employer requirements first. There are notifications to provide, and timelines for you to meet. And if members elect coverage, you will need to keep them in mind every time your health plans renew.

Requirement to offer COBRA
Need to know if your company is required to offer COBRA? Check out our “Basic COBRA: 101” article. Then come on back for the next course!

First things first
If your company is subject to COBRA, your first requirement is to notify employees of their COBRA rights. You only need to provide the notice to employees and dependents enrolled for active health coverage (medical, dental, vision, employee assistance programs, flexible spending accounts, and health reimbursement arrangements).

You must mail the General Notice (also referred to as an Initial Notice) to the employee’s home, and address it to the employee “and dependents” (you don’t have to include the actual names of dependents covered).

You have 90 days from finding out you must abide by COBRA laws to get this letter out. You must then provide the same notice, within 90 days of enrollment, to any employee and dependents enrolling on your plan in the future.

Qualifying Event Notice
The Qualifying Event Notice outlines members’ rights under COBRA once they have a Qualifying Event. This mailing would include another copy of the General Notice, the plan rates, the length of time COBRA can continue, and an election form. If your company is sending out these notices, you’ll have 30 days from the date coverage ends to send them out. If you are using a COBRA vendor, you have 30 days to notify the vendor, and they then have 15 days to send out the notice to the member.

Qualified Beneficiaries
COBRA continuation must be offered to employees, retirees, spouses, and children who are no longer eligible for your group-based health plans. They must have been enrolled on the coverage the day before their “Qualifying Event”.

Qualifying Events
Any time one of these instances occurs, a Qualifying Event Notice must be mailed out, addressed to the member(s) losing coverage:

  • Employee’s termination (except for gross misconduct)
  • Employee’s reduction in hours below the minimum allowed on your plan
  • Employee’s death (dependents can continue)
  • Employee becoming eligible for Medicare
  • Divorce or legal separation
  • Child reaching the age limitation of your plan

The employee must notify your company of a change in marital status or the loss of a dependent’s status under the plan (such as reaching the limiting age).

Open enrollment periods
Many employers forget about their COBRA members during the annual renewal process. Law requires that you offer all COBRA Qualified Beneficiaries the same rights as active employees. You’ll need to notify them of the changes to the plan and rates, and also allow them to make election changes. Allowing a choice between two medical plans now? COBRA members get the same choice. Adding a new vision plan? Yes, your COBRA members get to enroll even if it’s a brand new offering!

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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