What is COBRA? Which employees are eligible for COBRA? Is an employee required to accept COBRA coverage? No question is a silly question. We know – benefits are complicated. But, luckily for you, PlanSource is here to help.
We’ve scoured multiple resources to compile a comprehensive list of everything you, as an employer, needs to know about COBRA laws and administration. You can check the most common FAQs, view a short video on COBRA basics, or view our full guide to COBRA below. And, let us know if you have any additional questions that we missed, and we’ll add it to the list!
Before we get started, take a look at this short video explaining COBRA. We go into more detail on specific questions below, but this video is a great overview.
1.) What is “COBRA”?
“COBRA” is an acronym for the Consolidated Omnibus Budget Reconciliation Act. Passed in 1985, this federal legislation requires employers of 20 or more employees who offer health care benefits to also offer the option of continuing coverage to individuals who would otherwise lose benefits due to employment termination, reduction in hours, or certain other qualifying events (discussed below).
2.) What does COBRA do?
COBRA requires the continuation of health benefits coverage to be offered by qualifying employers to employees, their spouses and dependent children when group health coverage would otherwise be discontinued based on qualifying events.
3.) Which employers are required to provide COBRA benefits?
Employers that engage 20 or more employees are required to offer COBRA benefits.
4.) What group health plans are subject to COBRA?
The legislation applies to any and all group health plans offered by private-sector employers with 20 or more employees. COBRA benefits also extend to health plans offered through state or local governments.
5.) What group health plans are not subject to COBRA?
COBRA benefits do not extend to group plans offered through federal government organizations, churches and certain church-related organizations.
6.) Who is entitled to receive COBRA coverage?
As long as a qualifying event has taken place, anyone enrolled in an employee’s group health plan is eligible for COBRA coverage. This includes the employee and qualified beneficiaries, including spouses and dependents.
7.) What is a ‘qualified beneficiary’?
A qualified beneficiary is an individual covered by a company’s group health plan on the day before a qualifying event takes place. This person must either be an employee, the employee’s spouse, or the employee’s dependent child.
8.) What is a COBRA ‘qualifying event’?
Several events can trigger COBRA qualification for an employee, a spouse, or a dependent. These qualifying events include:
Qualifying Event For An Employee
- An employee’s voluntary or involuntary discontinuance of employment. *Note: there is an exception for gross misconduct that invalidates COBRA requirements – see PDF below for details.
- An employee’s reduction in hours of employment (ex: from full-time to part-time)
- A covered dependent’s change in status (Ex: when a child dependent ages out of required health coverage provided by an employer)
- An employee’s death
- An employee’s entitlement to Medicare
Please note that voluntarily dropping coverage during an open enrollment period is not a qualifying event, though doing so in conjunction with a qualifying event, like a divorce, would trigger COBRA rights for impacted parties (in this case, the spouse).
9.) What benefits must be covered under COBRA?
When an employee elects COBRA coverage, nothing about the existing health coverage plan will change. Coverage that must be included in COBRA plans includes:
- Health care plans
- Dental plans
- Vision plans
- Hearing plans
- Medical spending accounts
- Prescription drug plans
- Mental health plans
- Alcohol and substance abuse plans
Coverage limits, deductible amounts, and co-pay amounts will remain unchanged.
10.) What benefits are not covered under COBRA?
Several non-health related insurance plans or other employee benefits are not covered by COBRA. These include:
- Life insurance
- Retirement plans
- Disability insurance
- Vacation plans
There you have it – the 10 most popular questions related to COBRA and COBRA administration. Still have questions? We thought you might. Download our free COBRA guide below to see a full, comprehensive list of questions. Or, contact us today to speak with a PlanSource COBRA expert.
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