Many employees have the opportunity to enroll in group health care plans through their employer. These group health care plans allow employees to benefit from a reduced rate on their health care premiums, which are also often subsidized by the employer. In the event that an employee loses his or her health care coverage due to the involuntary loss of a job or a reduction in hours, employees may elect to enroll in COBRA.
The 1986 Consolidated Omnibus Budget Reconciliation Act (COBRA) extends group health care coverage for employees and other beneficiaries that have involuntarily lost their employment or had a reduction in the number of hours that they work. COBRA allows qualifying individuals to continue to receive group health care coverage at a group rate for a limited period of time.
COBRA is beneficial for many individuals. However, COBRA plans can be more expensive than some individual health care plans. Additionally, individuals should not enroll in a COBRA plan if they are eligible to receive health care coverage through another avenue, such as through Medicare or through a spouse’s health care plan.
Employers should provide COBRA participants with this Notification of Other Group Health Plan Coverage form. This form allows participants to notify their health care plan administrator if they are eligible for other group health care coverage, including Medicare.
Who Qualifies for COBRA
Employees that have involuntarily lost their jobs or had a reduction in their hours may elect to be covered by COBRA if they are unable to receive health care coverage through a spouse or through Medicare. Participants may include:
- Former employees
- Retirees
- Spouses of former employees or retirees
- Former spouses of former employees and retirees
- Former spouses of employees and retirees
- Dependent children
After an employee has qualified for COBRA coverage, the employer must notify the health care plan administrator within 30 days of the qualifying event.
Former employees and beneficiaries should be sent a plan election notice within 14 days of the date that the plan administrator receives notification of the qualifying event. The individual has up to 60 days to enroll in the COBRA plan. After enrolling in the COBRA plan, the individual has up to 45 days to pay the first premium.
Requirements for Employers
COBRA applies to state and local governments, employee organizations, and private-sector employers that have at least 20 employees.
When an employee has had a qualifying event, such as when an employee is laid off, the employer must notify the health care plan administrator within 30 days of the qualifying event. The employer should provide the employee with the COBRA Coverage Election form so that the employee is aware of his or her options and can apply for the COBRA coverage. Employers should also provide COBRA participants with this Notification of Other Group Health Plan Coverage form.
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