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The American Cancer Society
does not offer legal advice. This information is intended to provide
general background in this area of the law.
COBRA stands for the Consolidated
Omnibus Reconciliation Act, which became law in 1986.
COBRA gives you the right to choose to temporarily keep the group
health insurance benefits that you would otherwise lose after you
reduce your working hours, quit your job, or lose your job. It also
lets family members choose to keep health insurance after your job loss
or other qualifying
event that would normally cause them to lose the coverage
they have through your employer. (See below, "What is a qualifying
event under COBRA?") COBRA applies only to employers with 20 or more
employees.
Before this law went into effect, when employees left their
companies, they and any covered family members lost their health
insurance immediately. If the employee or a family member were ill,
they were often not able to get new health insurance because they were
already sick. COBRA allows an employee to buy health insurance through
the employer even though the person no longer works there or no longer
works full time.
How long does the COBRA coverage last?
The length of time you can keep COBRA coverage depends on your
qualifying event (see below). If your major medical coverage ends
because your employment ends (other than for gross misconduct), or
because your hours are reduced, you and your qualified dependents are
allowed to keep coverage under the employer's health insurance for up
to 18 months.
Also, under the Health Insurance Portability and
Accountability Act of 1996, certain people with a disability are
allowed to qualify for 29 months (the original 18 months plus an
11-month extension) of COBRA continuation coverage. To qualify for this
disability extension, the person must get a formal disability
determination from the Social Security Administration (SSA) that shows
they were disabled at the time (or within 60 days) of their COBRA
qualifying event. This means that the person must apply for disability
through the SSA and wait for their decision (determination) about
whether or not he or she is truly disabled. After getting the SSA
decision, the employee must send a copy of the letter to the insurance
plan administrator.
Lastly, dependents who lose job-based coverage due to a change
in the family (such as divorce or other qualifying event) can still get
COBRA coverage for up to 36 months. (See below, "What is a qualifying
event under COBRA?") People with COBRA coverage have the same health
benefits and rights as active employees. For example, they can change
plan options during open enrollment periods and parents can add
newborns and newly adopted children to their COBRA policies.
What is a qualifying event under COBRA?
A qualifying event is what makes employees or their dependents
eligible for COBRA coverage. Qualifying events for the employee include
loss of health insurance for any of the following reasons:
- termination of employment (employee quits job, is laid off,
or fired for anything other than gross misconduct)
- reduction in work hours (for reasons other than gross
misconduct)
Qualifying events for the spouse or dependents of the employee
who had been included on employee’s health plan include:
- the insured employee's death
- divorce or legal separation from the insured employee
- loss of dependent status (as defined by the insurance
plan's rules)
- employee becomes entitled to Medicare and the employer
takes him or her off the health insurance plan
- any event in the list above that causes the employee to
lose health coverage
The employee's qualified spouse or children may enroll in
COBRA even if the employee does not.
What is a qualifying event notice under
COBRA?
Before a group health plan must offer COBRA coverage, the
group health plan must be notified of the qualifying event. The
employer has 30 days after the event happens to notify the plan if the
qualifying event is any of the following:
- employee job loss
- reduced hours of the employee
- employee death
- Medicare eligibility of the employee
- employer files for bankruptcy
The employee or dependent must notify the group health plan
within 60 days of family changes:
- divorce
- legal separation
- child's loss of dependent status
How to go about doing this should be outlined in the summary
of plan description (SPD) you get from your employer when you enroll in
a health plan. If your employer does not have a reasonable procedure
for notifying the health plan, you can give notice by contacting the
person or unit that handles your employee benefits.
What is an election notice?
Within 14 days of getting the qualifying event notice (above),
the health plan must give the person who is about to lose health
insurance written notice of his or her COBRA rights. The election
notice should contain all of the information you will need to
understand COBRA coverage so that you can make an informed decision on
whether or not to continue coverage. It should also give you the name
of the person who handles COBRA for the health plan (the COBRA
administrator) and tell you how to get more information.
What do I do once I get the COBRA election
notice?
The employee or qualified dependents have 60 days after
receiving the election notice to choose health insurance coverage for
themselves under COBRA. The employee or dependent must notify the COBRA
administrator listed on their COBRA election notice in writing if they
wish to keep their health insurance. The COBRA administrator is the
person who keeps up with COBRA continuation benefits for the employer.
How long do I have before I must pay the
first COBRA premium?
The beneficiary has 45 days from the date he or she decided to
continue health insurance coverage to pay the first bill. That payment
generally must cover the period of coverage from the date COBRA was
chosen all the way back to the date of the loss of coverage due to the
qualifying event. Neither the health plan nor the employer is required
to send you monthly premium notices or "bills," so make sure you pay
attention to due dates.
How much does COBRA cost?
The premium for COBRA coverage is equal to the full cost of
your group health coverage – including the employer and
employee share – plus up to 2% more for administrative costs.
This is usually much more than the employee paid when he or she worked
for the company, since the company then probably paid for part of the
premium. Still, it is usually less costly than buying individual health
coverage. Some employers may give the option of dropping out of
"non-traditional" insurance plans, such as dental and vision coverage,
in order to reduce costs.
If you have already had the 18 month standard COBRA coverage
and have started on the 11-month disability extension, the premium may
be much higher. In this situation, the employer may charge up to 150%
of the actual insurance cost.
How long do I need to have a job in order to
be covered under COBRA?
You are eligible for COBRA coverage if you were covered under
the group health plan on the day before your qualifying event. This
1-day rule also applies to your spouse and dependents who were covered
under the plan.
Under what conditions is COBRA discontinued?
COBRA coverage is discontinued under the following
circumstances:
- The covered person becomes covered under another group plan
or becomes eligible under Medicare. If the new plan has a waiting
period for pre-existing conditions, you may choose to have coverage
under COBRA along with the new plan.
- The covered person does not pay the premiums for the
continued coverage. There is a 30-day grace period to pay premiums, but
your coverage may be put on hold for late payments. For example, if you
do not pay a premium by the first day of a period of coverage, the plan
may cancel your coverage. But if you pay before the grace period ends,
they will reinstate coverage retroactively back to the date your COBRA
coverage started. If you don't pay in full before the end of the grace
period you could lose all COBRA rights.
- The employer stops providing a group health plan to any
employees.
The employer is required to notify the employee if COBRA is
canceled early.
Is my dependent eligible for COBRA if his or
her insurance coverage with my plan ends?
If coverage for your dependent(s) ends for the following
reasons, their coverage may be continued for up to 36 months:
- your death
- your divorce or legal separation
- a dependent’s change in status to ineligible
under your health insurance plan (a child comes of age, gets married,
etc.)
What about the person who has been covered
under COBRA for 36 months and is almost but not quite 65?
Thirty-six months is the maximum amount of continuation
coverage under COBRA. Employers may extend your continuation coverage
for a longer period, but COBRA does not require it. A few states
require group health insurers they regulate to extend continuation
coverage until the age of Medicare eligibility.
What happens to COBRA coverage if a person's
disability has ended?
If Social Security has determined the disability no longer
exists and the person is not employed, COBRA coverage may be
discontinued in the month that begins more than 30 days after Social
Security's decision. The beneficiary is responsible for notifying the
health insurance plan administrator of the final determination.
Rising medical costs have made health insurance a household
necessity for most people, especially those with major illnesses such
as cancer. The COBRA law gives people a chance to hold on to this
important benefit for a while longer. Still, workers need to be aware
of changes in health care laws to keep their benefit rights. A good
place to look is in your health insurance plan booklet or with the
person who manages your plan. Most of the specific rules on COBRA
benefits can be found in 1 of these 2 resources.
How can I find out more about COBRA?
For more information about COBRA, call the Employee Benefits
Security Administration at 1-866-444-3272 or visit the Web site at:
www.dol.gov/ebsa/faqs/faq_consumer_cobra.html.
You can also find a
detailed brochure, An Employee's Guide to Health Benefits Under COBRA,
on the Web at: www.dol.gov/ebsa/pdf/cobraemployee.pdf.
If you have
questions about your state's requirements about COBRA and health
insurance, you can find your state's insurance department by contacting
the National Association of Insurance Commissioners (see "Additional
resources" section below).
Additional resources
More information from your American Cancer
Society
The following related information may also be helpful to you.
These materials may be ordered from our toll-free number,
1-800-ACS-2345.
Americans
with Disabilities Act: Information for People Facing
Cancer
Clinical
Trials: State Laws Regarding Insurance Coverage
Family
and Medical Leave Act (FMLA)
Financial
Guidance for Cancer Survivors and Their Families: Advanced
Illness
Financial
Guidance for Cancer Survivors and Their Families: How to Find
a Financial Professional Sensitive to Cancer Issues
Financial
Guidance for Cancer Survivors and Their Families: In
Treatment (also available in Spanish)
Financial
Guidance for Cancer Survivors and Their Families: Off
Treatment
Financial
Guidance for Those with Concerns About Cancer: Can I be
Prepared if Cancer Occurs?
Medical
Insurance and Financial Assistance for the Cancer Patient
(also
available in Spanish)
Prescription
Drug Assistance Programs
Women's
Health and Cancer Rights Act (also available in Spanish)
National organizations and Web sites*
In addition to the American Cancer Society, other sources of
patient information and support include:
Centers for
Medicare & Medicaid Services (CMS) - HHS
Toll-free number: 1-800-633-4227
TTY: 877-486-2048
Web site: www.cms.hhs.gov
Health Insurance
Info, Georgetown University Health Policy
Institute
Web site: www.healthinsuranceinfo.net
National
Association of Insurance Commissioners (NAIC)
Toll-free number: 1-816-842-3600
(866-470-NAIC)
Web site: www.naic.org
Patient Services
Incorporated (PSI)
Toll-free number: 1-800-366-7741
Web site: www.uneedpsi.org
U.S. Department
of Labor, Employee Benefits Security
Administration (EBSA)
Toll-free number: 1-866-444-3272
(866-444-EBSA)
Web site: www.dol.gov/ebsa
*Inclusion on this list does not imply endorsement by the
American Cancer Society
No matter who you are, we can help. Contact us anytime, day or
night, for information and support. Call us at 1-800-ACS-2345 or
visit www.cancer.org.
References
US Department of Labor, Employee Benefits Security
Administration. An Employee's Guide to Health Benefits Under COBRA. The
Consolidated Omnibus Budget Reconciliation Act of 1986. September 2006.
Available at: www.dol.gov/ebsa.
Accessed February 29, 2008.
US Department of Labor, Employee Benefits Security
Administration. Continuation of Health Coverage -- COBRA. Available at:
www.dol.gov/dol/topic/health-plans/cobra.htm.
Accessed February 29, 2008.
Revision date: 03/17/2008
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