A Federal law, generally known as COBRA, requires that most employers sponsoring group health plans offer employees and their families the opportunity for a temporary extension of health coverage at group rates in certain instances where coverage under the plan would otherwise end. If COBRA coverage is elected, the covered individuals are responsible for the full cost of premiums plus a 2% administrative fee. If COBRA coverage is not elected, the coverage ends. The following article provides information on when COBRA continuation coverage is available, who is a qualified beneficiary, and length of coverage.
WHEN IS COBRA CONTINUATION COVERAGE AVAILABLE?
Employees will be offered COBRA continuation coverage when a qualifying event occurs. Qualifying events are:
- The end of employment for any reason other than gross misconduct, including retirement.
- Reduction in hours of employment, including unpaid leaves of absence.
- The employee becomes entitled to Medicare benefits (under Part A, Part B, or both).
QUALIFIED BENEFICIARIES
If the spouse and/or dependent children of an employee are enrolled in district sponsored health plans, they could become qualified beneficiaries and are eligible for continuation of coverage when a qualifying event occurs.
Spouse of an employee
The spouse of an employee becomes a qualified beneficiary if loss of coverage occurs because of the following qualifying events:
- Death of your spouse-employee
- The spouse-employee’s hours of employment are reduced, including unpaid leaves of absence
- The spouse-employee’s employment ends for any reason other than his/her gross misconduct
- The spouse-employee becomes entitled to Medicare benefits (under Part A, Part B, or both)
- A legal divorce or separation from the spouse-employee occurs
Dependent children
The dependent children of an employee become qualified beneficiaries if loss of coverage occurs because of the following qualifying events:
- Death of the parent-employee
- The parent-employee’s hours of employment are reduced, including unpaid leaves of absence
- The parent-employee’s employment ends for any reason other than his/her gross misconduct
- Your parent-employee becomes entitled to Medicare benefits (under Part A, Part B, or both)
- The parents become divorced or legally separated
- The dependent child reaches the age of 26 or is otherwise no longer a dependent child
ELECTING COVERAGE
Qualified beneficiaries have the right to elect to maintain all or part of the coverage in effect as of the qualifying event and have at least 60 days to elect coverage retroactive from the date of loss of coverage. Payment for any retroactive premiums must be received in the Payroll/Benefits department within 45 days of electing applicable coverage. Covered individuals are responsible for making payments to the district on their own. After the initial payment, premiums are due to the Payroll/Benefits department by the 25th of the month for the following month’s coverage. For example, premiums for February coverage would be due on January 25th. Premiums are subject to change whenever the district’s premiums are adjusted.
DURATION/TERMINATION OF COVERAGE
The following table represents basic information on periods of continuation coverage:
Qualified Beneficiary |
Qualifying Event |
Period of Coverage |
Employee Spouse |
Termination Reduced Hours |
18 months (This 18 month period may be extended for all qualified beneficiaries if certain conditions are met in cases where a qualified beneficiary is determined to be disabled) |
Spouse Dependent Child |
Entitled to Medicare Divorce or legal separation Death of covered employee |
36 months |
Dependent Child |
Loss of dependent child status |
36 months |
Covered individuals do not need to do anything at the end of the COBRA period. Coverage will be terminated automatically.
Coverage may be terminated early for any of the following reasons:
- The premiums are not received timely (covered individuals will have a 30 day grace period from due date).
- Covered individuals become covered by another plan which does not limit coverage for pre-existing conditions.
- Covered individuals become entitled to Medicare.
- The district’s group health plans are terminated.
- The coverage was extended to 29 months because of a disability and the covered individual is no longer disabled.