Posted by Nancy B. Pridgen
COBRA continuation coverage can help you and your family maintain health insurance coverage if your employment situation changes. COBRA allows you to extend your coverage under your employer-provided group health plan even if your employment is ended or your hours are reduced. Also, the American Rescue Plan (ARP) offers additional benefits that can help you keep your coverage and cover the costs of health insurance premiums.
What is COBRA continuation coverage?
Under COBRA, certain qualified employees and their non-employee beneficiaries have the right to extend their employer's group health plan coverage beyond the date of an event that would typically cause the employee to lose coverage under the health plan, such as a termination or resignation (a “qualifying event”). Plan beneficiaries using COBRA continuation coverage are often required to pay the full cost of their premiums.
Who is eligible for COBRA continuation coverage?
Continuation coverage applies only to those employees who were covered under their employer's group health plan prior to a qualifying event and their qualified beneficiaries (typically the covered employee's spouse and dependent children). Individuals who were never covered under their employer's group health plan are generally not eligible for continuation coverage. Further, COBRA only applies to group health plans maintained by larger employers who had 20 or more employees on more than 50% of the business days in the previous calendar year.
If you are a qualified beneficiary of an employee eligible for COBRA—such as a spouse or dependent child—you can independently elect to receive COBRA, even if the covered employee elects not to. For employees, qualifying events are typically terminations, resignations, and reductions in hours. But for qualified beneficiaries, qualifying events might be a divorce from a covered employee or a dependent child “aging out” under the terms of the plan.
What do I have to do to enroll in COBRA continuation coverage, and what will my coverage look like under COBRA?
Once a qualifying event occurs, eligible individuals must be given a chance to elect to continue their coverage. Typically, your employer must notify your Plan Administrator that a qualifying event has occurred. In some cases, you may be required to provide this notice yourself. The Plan Administrator must provide you with a notice of your right to elect to receive continuation coverage and give you an opportunity to make the election.
Under COBRA, the coverage offered to you must be identical to the coverage provided to similar individuals whom the plan still covers. However, this does not mean that your continuation coverage will be identical to the coverage you had before the qualifying event.
How long is the COBRA continuation period?
The continuation period begins on the day of the qualifying event and not on the date that you elect to receive continuation coverage. There are two main continuation periods:
- 18 months from the date of the qualifying event for employees who resign, are terminated, or have their hours reduced such that they no longer qualify for healthcare coverage under their employer.
- 36 months from the date of the qualifying event for spouses or dependents who lose coverage due to an event other than a termination, resignation, or reduction in hours of a covered employee, such as the death or disability of the employee, divorce, legal separation, or loss of a child's status as a dependent.
However, some exceptions that will change the continuation period include disability, multiple qualifying events, entitlement to Medicare coverage, employer bankruptcy, and certain rules unique to California law.
What if I become disabled during my COBRA continuation coverage?
Disability is one of the above exceptions that can change the COBRA continuation period. If you become disabled during the first 60 days of COBRA continuation coverage, you may be entitled to 29 months of continued coverage. This coverage can apply to all qualified beneficiaries independently, regardless of their disability status. Premiums for the last 11 months of this period can be increased to 150% of the pre-COBRA coverage premiums.
To receive the 29 months of continued coverage, the qualified individual must provide the plan administrator with notice of disability within 60 days of the disability determination. Also, the plan administrator must be notified within 30 days if a qualified individual is no longer disabled.
Can my COBRA continuation coverage be terminated prior to the end of the continuation period?
Yes. Coverage can be terminated early if: (1) you fail to pay premiums in a timely manner (though limited grace periods are available); (2) you become covered under another health benefit plan; (3) you become entitled to Medicare benefits; or (4) the providing employer ceases to provide any group plan for any employee. Additionally, COBRA coverage can be terminated for cause for the same reasons that an active employee's benefits can be terminated under the terms of the plan.
How has the American Rescue Plan (“ARP”) affected COBRA continuation coverage?
The ARP provides temporary premium payment assistance for qualifying individuals from April 1, 2021 to September 30, 2021. Qualifying individuals are those who experienced a qualifying event under COBRA, have elected to receive COBRA continuation coverage, and are not eligible for other group health coverage through some other plan or Medicare. However, if you have individual health insurance coverage such as through the Health Insurance Marketplace, or if you qualify for Medicaid, you may still be eligible for ARP premium assistance.
How do I receive premium assistance?
If you were a qualifying employee or beneficiary at the time of your qualifying event, you should have received a notice of your eligibility for COBRA continuation coverage. This election notice should have included forms to indicate that you are an Assistance Eligible Individual. If you believe you are an Assistance Eligible Individual and have yet to receive notice from your employer, you can make a request to your employer.
What will premium assistance look like?
If you are eligible for premium assistance under the ARP, you should be treated as having paid your premiums in full from April 1, 2021 to September 30, 2021. Therefore, your plan/plan administrator should not collect premium payments during this period, and you may be eligible for future payment credits or refunds if you have paid any premiums from April 2021 to September 2021.
Does the ARP modify COBRA's notice requirements?
Yes, the ARP imposes the following additional notice requirements on Plans/Plan Administrators and Insurers/Issuers:
- General notice regarding premium assistance and other ARP rights/benefits to all qualified individuals whose qualifying event was a reduction in hours or involuntary termination that occurred between April 1, 2021 and September 30, 2021.
- Notice of the extended COBRA election period within 60 days of April 1, 2021 to any Assistance Eligible Individual who had a qualifying event before April 1, 2021. This does not include individuals whose maximum COBRA continuation coverage period would have ended before April 1, 2021.
- For premium assistance eligible individuals, notice of expiration of premium assistance given 15 – 45 days prior to the expiration.
If you have any questions regarding COBRA continuation coverage or you believe that your employer has failed to provide you with the benefits to which you are entitled, please contact [us/Pridgen Basset] by [preferred contact method].